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Where a tax increases linearly, the deadweight loss increases as the square of the tax increase. This means that when the size of a tax doubles, the base and height of the triangle double. Thus, doubling the tax increases the deadweight loss by a factor of 4. The varying deadweight loss from a tax also affects the government's total tax revenue.
Fischer computes the deadweight loss generated by an increase in inflation from zero to 10 percent as just 0.3 percent of GDP using the monetary base as the definition of money. [4] Lucas places the cost of a 10 percent inflation at 0.45 percent of GDP using M1 as the measure of money.
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In the first graph at right, the dashed green line represents a price floor set below the free-market price. In this case, the floor has no practical effect. The government has mandated a minimum price, but the market already bears and is using a higher price. An effective, binding price floor, causing a surplus (supply exceeds demand)
Despite promising decreases in the energy index and food numbers holding steady, the overall consumer price index (CPI) rose 0.1% in March. The current U.S. inflation rate is 5% for the 12-month...
[78]: 1 [89]: 4 [88]: 1 Writing in 1946, economists Milton Friedman and George J. Stigler said: "Rent ceilings, therefore, cause haphazard and arbitrary allocation of space, inefficient use of space, retardation of new construction and indefinite continuance of rent ceilings, or subsidization of new construction and a future depression in ...
There’s a problem with inflation. It just refuses to go that “last mile” down to 2%, the magic percentage targeted by the Federal Reserve.Economists have widely agreed on one culprit: high ...
The shelter index consists of what rent prices and what a homeowner would pay to rent an equivalent apartment, known as owners' equivalent rent, which gained 0.5% over the last month.