Is it proper to say corporations pay taxes? Why or why not? How does the allocation of the corporate income tax burden change from the short to the long run?
What will be an ideal response?
No, strictly speaking, it is not proper to say that corporations pay the corporate income tax. The corporate income tax is ultimately borne by individuals, either the corporation's stockholders, customers, or employees. In the short run, capital is assumed to be fixed so the stockholder's will be unable to shift much of the burden onto the firm's customers. In the long run capital is more mobile, and so the owners of the firms will be able to shift most of the corporate tax burden onto its customers or employees.
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Refer to the figure above. The economy is currently at E. Which of the following is likely to happen if a recession hits the economy? Assume that wages are downwardly rigid
A) The labor market equilibrium will move from E to F. B) The labor market equilibrium will move from E to D. C) The labor market equilibrium will move from E to G. D) The labor market equilibrium will move from E to H.
Nontradables are cited as a reason why purchasing power parity doesn't hold because:
A. goods that you can't transport cannot be sold for a profit elsewhere, even if the price differs in different locations. B. there is no economic opportunity to profit if the goods cannot be sold in another market for another price. C. location-specific goods are impossible to calculate a price elsewhere for. D. All of these statements are true.
A movement along a consumption function is caused by:
a. a change in households' real assets. b. a change in interest rates. c. changes in taxation policy. d. expectations of price changes. e. changes in households' disposable incomes.
Beth really wants to get in shape, but just can't seem to ever get herself to the gym. An example of a commitment device Beth could use would be:
A. to make arrangements to meet with an exercise buddy every day at the gym to work out together. B. to spend time before going to the gym doing something she really enjoys doing, like seeing a movie. C. to allow herself one dessert for each visit to the gym. D. None of these is a commitment device.