A complete understanding of tax policy requires knowledge of the principles of equity and efficiency in taxation, as well as awareness of _____
a. business
b. sociology
c. ethics
d. politics
Tax Policy in the Real World
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In the short-run macro model, if the economy is in equilibrium, it must also be operating at full employment
a. True b. False
Which of the following is an argument for tax cuts rather than government spending as a way to promote recovery from a recession?
a. Tax cuts are better suited to direct resources into projects that consumers value more highly than the resources required for their production. b. 100 percent of a tax cut will stimulate aggregate demand, but this will not be the case for an increase in government expenditures. c. Tax cuts will encourage rent seeking; increases in government spending will not. d. Tax cuts will change the structure of aggregate demand more than increases in government spending.
The Heckscher-Ohlin theory predicts that the opening of trade between a land-abundant country and a labor-abundant country should result in
A. higher wages in the labor-abundant country and higher rents in the land-abundant country. B. higher rents and wages in both countries. C. lower rents and wages in both countries. D. higher rents in the labor-abundant country and higher wages in the land-abundant country.
If the demand for a product in an increasing cost perfectly competitive industry decreases, we would expect that price in the long run would ________ and the number of firms in the market would ________.
A. decrease; decrease B. increase; increase C. decrease; increase D. increase; decrease