Real national income can never exceed its potential level

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Reference no: EM13733430

Explain why each of the following statements is True, False, or Uncertain according to economic principles.

Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important.

1. The direct and excess burdens from an excise tax are greater the less elastic is demand in the market.

[Hint: Assume perfectly elastic supply.]

2. Real national income can never exceed its potential level.

Reference no: EM13733430

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