Explain how tax revenue can be both an automatic fiscal policy and a discretionary fiscal policy
What will be an ideal response?
When Congress changes the tax law, it is a discretionary policy. For any given set of tax laws, a change in the state of the economy will automatically change the tax revenue. Hence for a given set of tax laws, tax revenues operate as an automatic fiscal policy.
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If the price elasticity of supply of a good is 2, a 200% increase in the price of the good, will change the quantity supplied by:
A) 50%. B) 100%. C) 200%. D) 400%.
Since the mid-1980s, the United States has been a net ________ and a ________ nation
A) borrower; creditor B) lender; creditor C) borrower; debtor D) lender; debtor
Joe consumes pizza and movies. He is currently spending his entire income and his marginal utility of pizza is 10 and his marginal utility of movies is 5
If the price of a pizza is $10 and the price of a movie is $5, then to maximize his utility Joe should A) increase consumption of pizza and decrease consumption of movies. B) increase consumption of movies and decrease consumption of pizza. C) not change his current bundle of movies and pizza. D) increase consumption of both goods.
Banks make use of the federal funds market in part to
A) pay their tax liabilities. B) manage liquidity risk. C) deal with moral hazard. D) deal with adverse selection.