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PS4_samplefinal - Econ 312 Fiscal Policy and Public Finance...

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Econ 312 Fiscal Policy and Public Finance Dr. Pınar Derin Güre SAMPLE FINAL (PROBLEM SET 4) DUE MONDAY, MAY 31(FINAL EXAM DATE) Please bring your problem set s solutions to the Final Exam Instructions. Please answer the following questions. Write your answers clearly on the final. You can achieve a total 100 points. There are short questions (15/100) followed by long questions (weighed 85/100). You should read all of the questions first. There is a blank page attached at the end of the midterm to be used as scratch paper. GOOD LUCK! SHORT QUESTIONS (15 points) MULTIPLE CHOICES 1. A tax levied on producers is fully shifted to consumers when: a. demand is perfectly elastic. b. demand is perfectly inelastic. c. supply is perfectly inelastic. d. both a and c are true. e. both b and c are true. 2. Suppose that the government were to tax all car wash businesses in your town. Assume that the demand for car washes is perfectly elastic, demand for car wash employees is perfectly elastic in the short run, and the supply and demand of capital (i.e., the car wash equipment) is elastic (but not perfectly so) in the short run and perfectly elastic in the long run. According to general equilibrium tax incidence analysis, __________ bear the tax in the short run and ________ bear the tax in the long run
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3. Suppose that the government were to levy a tax on all computers sold in Turkey. Assume that all goods are normal goods. Which of the following is a spillover income effect of the tax?
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