Assume that instead of having a federal income tax, the federal taxes are levied as a consumption tax based upon a flat rate of 10 percent of all that you consume

How would this tax be different from an income tax? Would you expect this tax to be progressive, proportional, or regressive? What do you think would happen to the amount that people save under such a tax scheme? Explain your answers.


Saving would no longer be taxed as it is now. The tax would likely be more regressive than the current system because higher income households generally save more. Saving should increase because it is relatively subsidized by not being taxed.

Economics

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The real-nominal principle can be stated as

A) only final goods and services should be counted in GDP. B) only the manufacture of real goods is production. C) what matters to people is the purchasing power of money or income. D) production generates income.

Economics

Explain why a production quota is inefficient

What will be an ideal response?

Economics

The absolute value of the slope of the budget constraint is equal to

A) the quantity of the good on the vertical axis divided by the quantity of the good on the horizontal axis. B) the price of good on the horizontal axis divided by the price of the good on the vertical axis. C) the marginal rate of substitution between the two goods in question. D) the price of good on the vertical axis divided by the price of the good on the horizontal axis.

Economics

An example of ________ is an internship program.

A. social capital B. infrastructure C. tangible capital D. intangible capital

Economics