Suppose there is a simple tax system that says you pay 10% for income up to $10,000, 25% for income between $10,000 and $50,000, and 35% for all income above $50,000. Mr. Campbell has income of $72,000. Mrs. Campbell has income of $55,000.
(A) What is Mr. Campbell's individual tax liability? Mrs. Campbell's?
(B) What is their liability if they file a joint return?
(C) Is there a marriage penalty? If so, how much is it?
(A) Mr. Campbell: [(10,000 * 0.10) + (40,000 * 0.25) + (22,000 * 0.35)] = $18,700.
Mrs. Campbell: [(10,000 * 0.10) + (40,000 * 0.25) + (5,000 * 0.35)] = $12,750.
Total tax if filed separately = 18,700 + 12,750 = $31,450.
(B) Jointly: [(10,000 * 0.10) + (40,000 * 0.25) + (77,000 * 0.35)] = $37,950.
(C) Yes, the difference is $37,950 - $31,450 = $6,500.
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According to New Keynesians, why can firms increase output in the short run in response to higher prices?
What will be an ideal response?
Which of the following models emphasizes the importance of credible, predictable government policies for maintaining full employment with low inflation?
a. The monetarist model. b. The Keynesian model. c. The supply-side model. d. The rational expectations model.
If you believe that government intervention to achieve full employment without inflation can be effective, you are a member in good standing in the
a. Phillips school b. classical school c. Keynesian school d. neo-Keynesian school e. rational expectations school