The most progressive tax of the major taxes employed in the United States _____
a. are sales taxes
b. are excise taxes
c. are income taxes
d. are property taxes
c
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A Pigovian tax internalizes an external cost because
a. the cost then enters the decision-making process of the producer. b. it would be collected by the Internal Revenue Service. c. the revenue is used to compensate injured parties. d. no transactions costs are created.
An increase in the domestic real interest rate will tend to cause, other things the same ________
A) a depreciation of the domestic currency B) an increase in the demand for domestic goods and services C) an increase in demand for foreign currencies D) an appreciation of the domestic currency
Which of the following fiscal programs is least likely to affect aggregate demand?
a. Defense spending b. Road construction c. Grants for scientific research and development d. Social Security for women e. Government purchases of labor
For this question, assume that one-year and two-year bonds have the same risk; therefore, you can ignore risk here. Assuming that there is arbitrage between one-year bonds and two-year bonds, we know that the expected rate of return on two-year bonds
A) will equal the expected rate of return from holding a one-year bond for one year. B) will equal the expected rate of return from holding a one-year bond for two years. C) will be larger than the expected rate of return from holding a one-year bond for one year. D) will be smaller than the expected rate of return from holding a one-year bond for one year. E) will be exactly half the rate of return on one-year bonds.