Under a proportional tax, the fraction of income paid in taxes
A. rises as income rises.
B. is unchanged as income changes.
C. falls as income rises.
D. is proportional to the change in income.
Answer: B
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Suppose that the average total cost of producing 5,000 Corvettes is $30,000 and the average total cost of producing 10,000 Corvettes is also $30,000 . Assuming this cost structure continues to hold, what can you say about the change in General Motors' total cost of Corvette production when they make the 10,001st car?
a. The total cost of production does not change at all. b. The total cost of production will increase by the average variable cost of the next car. c. The change is negative because there are diseconomies of scale. d. There is not enough information to answer this question. e. The total cost of production will increase by $30,000.
If an economy is producing at a point inside a production possibilities curve:
A. there is economic growth. B. resources are fully employed. C. resources are unemployed. D. the economy is efficient.
If the marginal benefit from water pollution abatement increases, then it is efficient to:
A. reduce water pollution to zero. B. allow more water pollution. C. let the market determine water pollution D. reduce water pollution further, but maybe not to zero.
The Fed can reduce the money supply by reducing
A. the monetary base. B. the discount rate. C. the currency-deposit ratio. D. reserve requirements.