Many believe that fairness calls for higher income taxes on the wealthy. Using one of the “Ideas for Beyond the Final Exam,” explain how higher taxes on the wealthy will affect output.
What will be an ideal response?
Greater equality comes at the expense of reduced output. The reversal of Ronald Reagan’s tax cuts will diminish the incentive of the wealthy to earn taxable income. They will work fewer hours or less hard, or they will accept nonwage benefits such as country club memberships, find more tax loopholes, or even seek illegal channels to reduce their tax liability.
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Inflation is a measure of the ________ of prices; the CPI is a measure of the ________ of prices.
A. current level; rate of change in the level B. index; base year's level C. base year's level; index D. rate of change in the level; current level
Which of the following variables is fixed in the aggregate expenditure model?
A) output B) real GDP C) consumption D) investment E) price level
When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied resulting in
a. excess demand or shortages. b. excess supply or surpluses. c. equilibrium prices. d. price controls.
GDP is the market value of all final goods and services produced within a country in a given period of time
a. True b. False Indicate whether the statement is true or false