Suppose the tax amount on the first $10,000 income is $0; $2000 on the next $20,000; $4000 on the next $20,000; $6000 on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $30,000 and Family B has income of $80,000. What
is the marginal and average tax rate for each family?
A) Family A: marginal—10 percent; average—6.7 percent; Family B: marginal—30 percent; average—15 percent.
B) Family A: marginal—10 percent; average—20 percent; Family B: marginal—30 percent; average—23 percent.
C) Family A: marginal—10 percent; average—10 percent; Family B: marginal—40 percent; average—40 percent.
D) Family A: marginal—10 percent; average—15 percent; Family B: marginal—40 percent; average—20 percent.
Answer: A
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An insight into business cycles is gained by the fact that
A) changes in real GDP result in changes in autonomous expenditures. B) at a peak, a decrease in autonomous expenditure leads to a decrease in induced expenditure. C) autonomous expenditure does not change at either a peak or a trough. D) at a peak, autonomous expenditure increases, thereby leading to a recession. E) at a trough, induced expenditure decreases, thereby leading to an expansion.
John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions
a. True b. False Indicate whether the statement is true or false
An increase in the number of college scholarships issued by private foundations would
a. increase the supply of education. b. decrease the supply of education. c. increase the demand for education. d. decrease the demand for education.
The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit. Which of these policies shift aggregate demand to the right?
a. both the money supply increase and the investment tax credit b. the money supply increase but not the investment tax credit c. the investment tax credit but not the money supply increase d. neither the investment tax credit nor the money supply increase