If the Supply of Capital Is Perfectly Elastic,a Tax on Capital

question 38

Multiple Choice

If the supply of capital is perfectly elastic,a tax on capital income results in

• A) a deadweight loss and lenders pay all of the tax.
• B) a deadweight loss and borrowers (firms) pay all of the tax.
• C) no deadweight loss and borrowers (firms) and lenders split the tax.
• D) no deadweight loss and lenders pay all of the tax.
• E) no deadweight loss and borrowers (firms) pay all of the tax.

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Definitions:

Temporal Conditioning

A form of conditioning in which the passage of time serves as the conditioned stimulus.

Salience

The property of a specific stimulus that allows it to become readily associated with a particular unconditioned stimulus (UCS).

Trace Conditioning

When the conditioned stimulus (CS) is presented and terminated prior to unconditioned stimulus (UCS) onset with this conditioning paradigm.