Consider an individual who earns $95,000, has two children, pays $6,000 in child care expenses for one child, pays $19,000 in college tuition for the other child, pays $6,500 in mortgage interest (mortgage interest is tax deductible), and pays $9,600 in medical expenses. Medical expenses in excess of 7.5 percent of one's income are deductible. Personal exemptions are $3,050 per person (including the tax filer). When the individual's income is $30,000 or above, he/she gets a 12% child care credit. A college credit of 9% of tuition costs is given to those that have income less than $90,000. Her statutory marginal tax rate is 15 percent. What is her actual or effective marginal tax rate?
What will be an ideal response?
Final taxes owed are $10,811.25, making the effective tax rate 11.38%.
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An adverse supply shock would cause the FE line to
A) shift to the right. B) shift to the left. C) remain unchanged. D) remain unchanged if the shock is temporary; shift to the right if the shock is permanent.
Private businesses tend to spend too little on research and development, because ________
A) investments to increase the capital stock are a better way to boost productivity B) governments tend to spend too much on research and development C) patent laws make it difficult to reap the benefits of such spending D) technology is often nonexcludable
Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an example of a(n) (i) imperfectly competitive market. (ii) monopoly market. (iii) oligopoly market
a. (i) and (ii) only b. (ii) and (iii) only c. (i) and (iii) only d. (iii) only
When economists describe preferences, they often use the concept of
a. markets. b. income. c. utility. d. prices.