Suppose that a study is released stating that the fewer speeding tickets a person is issued, the less gasoline they tend to purchase. This is best described as an example of
A. positive correlation.
B. negative correlation.
C. positive causation.
D. negative causation.
Answer: A
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Rather than prohibiting a good or service, the government might tax it. Imposing such a tax on a good or service ________ the equilibrium price and ________ the equilibrium quantity
A) raises; increases B) raises; decreases C) lowers; increases D) lowers; decreases
Personal and corporate income taxes are automatic stabilizers because
a. they generate approximately the same revenues during prosperity and recession b. tax rates decrease more during prosperity than during recession c. tax rates increase more during prosperity than during recession d. they take more income out of the economy during prosperity than during recession e. they take less income out of the economy during prosperity than during recession
You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?
a. A lump-sum tax would achieve the second goal but not the first. b. A regressive tax would achieve the second goal but not the first. c. A progressive tax could achieve both goals. d. A proportional tax could achieve the second goal but not the first.
The idea that the long-run Phillips curve is
a. vertical stems from the analysis of Samuelson and Solow. b. vertical stems from the analysis of Friedman and Phelps. c. vertical was disproved by the experiment that monetary and fiscal policymakers inadvertently created in the 1970s. d. downward-sloping can be correct if unemployment responds very quickly to unexpected inflation.