Maude is complaining about how much she pays in taxes now that the economy is finally doing really well. Even though she's in the same tax bracket as she was last year, she's paying $500 more in taxes this year, just because she earned more overtime pay this year. Maude's increased tax payment to the government is an example of:
A. automatic stabilizers.
B. discretionary fiscal policy.
C. expansionary fiscal policy.
D. contractionary fiscal policy.
Answer: A
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Refer to Figure 11.2. Suppose that Ca = 40, MPC = 0.8, I = 10. Equilibrium income is
A) 40. B) 50. C) 250. D) 400.
Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon. What most likely happens next?
A. Service station operators pass along the tax to you, adding the 10 cents to the price of a gallon of gas. B. Service station operators grumble, but pay the tax without passing the cost along to you. C. Service station operators pass along as much of the tax to you as they can, perhaps around 6 cents/gallon. D. The tax does not affect the outcome in the gasoline market.
If the government created a surplus of an agricultural product due to price supports, how might they dispose of this surplus?
A) give it away to a foreign country B) purchase it and store it away C) have the farmer destroy the crop D) Any of these answers might be a successful tool in disposing of agricultural surpluses.
Banks create money when they make loans
a. True b. False Indicate whether the statement is true or false