Consider two people, Sandy Smith, who earns $25,000 . and Gary Carver, who earns $50,000 . If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent, then Gary pays:
a. $10,000 in taxes and Sandy pays $5,000 in taxes.
b. $10,000 in taxes and Sandy pays $10,000 in taxes.
c. $15,000 in taxes and Sandy pays $5,000 in taxes.
d. $15,000 in taxes and Sandy pays $10,000 in taxes.
e. $17,000 in taxes and Sandy pays $5,000 in taxes.
c
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All of the following are advantages of a corporation EXCEPT
A) double taxation. B) limited liability. C) ability to raise large sums of financial capital. D) unlimited life.
Considering the concept of cross-price elasticity, if two goods are complements:
A. an increase in the price of one will cause a decrease in the demand for the other. B. an increase in the price of one will cause an increase in the demand for the other. C. a decrease in the price of one will cause a decrease in the demand for the other. D. the cross-price elasticity is positive.
If the government sells U.S. Treasury bonds to finance its budget deficit, one would expect:
a. interest rates to rise. b. domestic investment to rise. c. tax rates to fall. d. inflation to rise. e. interest rates to fall.
Government transfer payments act as automatic stabilizers because as labor income decreases, transfer payments
A. decrease as well. B. remain constant. C. increase. D. to the government increase.