When a Tax Is Levied on a Good

question 242

Multiple Choice

When a tax is levied on a good,

• A)neither buyers nor sellers are made worse off.
• B)only sellers are made worse off.
• C)only buyers are made worse off.
• D)both buyers and sellers are made worse off.

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Definitions:

Inflationary Gap

The difference between the actual output of an economy and the output it could achieve with full employment, leading to inflation when demand outstrips supply.

GDP

The total economic value of all end goods and services made within a nation's borders during a specific period is known as Gross Domestic Product.

Inflationary Gap

A situation where the demand for goods and services exceeds the supply, leading to inflation and an overheating economy.

Fiscal Policy

Alterations in expenditure and taxation by the government to control and impact the country's economic conditions.