As the economy declines into recession, the collection of personal income tax revenues automatically falls. This phenomenon best illustrates how a progressive income-tax system:
A. Increases crowding out in the economy
B. Decreases real interest rates in the economy
C. Offsets the timing problem for fiscal policy
D. Serves as an automatic stabilizer for the economy
D. Serves as an automatic stabilizer for the economy
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Which of the following defines economics? Economics is the social science that studies ___________
A. the best way of eliminating scarcity B. the choices made to cope with scarcity, how incentives influence those choices, and how the choices are coordinated C. how money is created and used D. the inevitable conflict between self-interest and the social interest
The government wishes to close an inflationary gap by reducing national income by $400 billion. Assuming a tax multiplier of 4 and an income multiplier of 5, which of the following policy prescriptions would reduce the inflationary gap by $400 billion?
a. decreasing government spending by $400 billion and increasing taxes by $400 billion b. decreasing government spending by $160 billion and decreasing taxes by $100 billion c. decreasing government spending by $40 billion and decreasing taxes by $40 billion d. decreasing government spending by $80 billion and keeping taxes the same e. doing absolutely nothing to the economy
When studying the effects of changes in public policy, economists believe that
a. it is important to distinguish between the short run and the long run. b. the assumptions used in studying those effects should be the same for the short run as for the long run. c. the short-run effects of those changes are always more beneficial to society than are the long-run effects. d. the long-run effects of those changes are always more beneficial to society than are the short-run effects.
For a perfectly competitive firm, marginal revenue product is equal to:
a. the difference between marginal revenue and marginal cost. b. the product price multiplied by total output. c. the change in total product arising from a unit change in resource usage. d. marginal product multiplied by product price.