An average tax rate is calculated as
A) total taxable income × taxes paid.
B) taxes paid ÷ total taxable income.
C) (total taxable income - taxes paid) ÷ taxable income.
D) total taxable income ÷ taxes paid.
B
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Which of the following does NOT occur when the economy is operating at the equilibrium level of GDP?
A) Total planned expenditures equal real GDP. B) Planned investment equals actual investment. C) Inventory investment equals zero. D) Real GDP tends to rise over time.
Government regulations requiring firms that desire to sell securities in financial markets to disclose all available information
A) eliminate the adverse selection problem (when rigorously enforced). B) increase the difficulty that young firms may have in raising funds. C) eliminate the moral hazard problem in securities markets. D) fail to eliminate the adverse selection problem, in part because they do not greatly reduce the difficulty that young firms have in raising funds.
What is the largest source of tax revenue for the U.S. federal government and what is the largest expenditure item of the U.S. federal government?
What will be an ideal response?
Imagine that the U.S. economy is in equilibrium at full employment without inflation where national income is at $6,700 billion. The MPC = 0.8 . If massive flooding along the Mississippi River leads Congress to approve a spending package of $10 billion to aid flood victims, the government must also take which of the following actions to keep the economy in equilibrium at full employment without
inflation? a. increase taxes by $10 billion b. decrease taxes by $10 billion c. increase taxes by more than $10 billion d. decrease taxes by more than $10 billion e. increase taxes by less than $10 billion