Assume the government was to levy a tax of $100 per person on every individual in the country. Would this tax be characterized as proportional, progressive or regressive? Make sure to explain your reasoning
What will be an ideal response?
This would be a regressive tax. The reason is that as incomes rise people will bear a lower average tax rate and vice versa.
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In perfectly competitive markets, an implication of entry and exit in response to economic profit and loss is that:
A. firms will earn zero economic profit in the long run. B. market demand is completely elastic. C. firms must earn positive economic profit in the long run. D. all firms will exit the market in the long run.
When real Gross Domestic Product (GDP) falls, which of the following will automatically occur?
A) an increase in income tax revenues B) a decrease in all tax rates C) a decrease in unemployment compensation expenditures D) a decrease in income tax revenues
The equilibrium level of national income occurs where
a. Y = C + S b. C + Ii = C + S c. Y = C + S + I d. C + Ii = S e. Y = C + S + Ii
In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are
a. housing, transportation, and recreation. b. housing, transportation, and food & beverages. c. housing, food & beverages, and education & communication. d. housing, medical care, and education & communication.