If Sophia's tax liability increases from $10,000 to $15,000 when her income increases from $30,000 to $40,000, her marginal tax rate is
a. 33 percent.
b. 35 percent.
c. 50 percent.
d. 60 percent.
C
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Agency problems in the subprime mortgage market included all of the following EXCEPT
A) homeowners could refinance their houses with larger loans when their homes appreciated in value. B) mortgage originators had little incentives to make sure that the mortgagee is a good credit risk. C) underwriters of mortgage-backed securities had weak incentives to make sure that the holders of the securities would be paid back. D) the evaluators of securities, the credit rating agencies, were subject to conflicts of interest.
Ricardian equivalence predicts:
A. that if governments cut taxes but not spending, people will not change their behavior. B. if people perceive current tax cuts to mean higher tax payments in the future, the cuts will have little expansionary effect. C. the consumers need to feel as though they will not have to pay in the future for current spending to make current tax cuts effective expansionary policy. D. All of these are true.
The most appropriate countercyclical policy, or stabilization policy, in times of unemployment, according to classical economists, is for the government to
a. increase the minimum wage b. impose wage and price controls c. stimulate aggregate demand d. cut taxes e. do nothing
List the five categories of federal government expenditures
What will be an ideal response?