As a tax increases, the excess burden from increasing the tax grows faster than the corresponding tax revenue. This is the impetus behind _____
a. lump sum taxes
b. the excess burden rule
c. the Ramsey rule
d. placing taxes only on the most inelastic goods
c
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
In general, as individuals undertake additional years of schooling,
A) their stock of human capital increases. B) the marginal productivity of individuals as workers declines. C) the marginal benefit to society of the extra years of education increases. D) the marginal productivity of individuals as workers becomes negative.
Suppose the economy is at a full-employment GDP of $1 trillion and the tax revenue received by the federal government is always one-fifth of GDP. If planned government expenditure is $300 billion, the structural
A. Deficit is zero. B. Deficit is $100 billion. C. Deficit is $500 billion. D. Surplus is $100 billion.
When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10 . You compute the price of jeans relative to tee-shirts
a. The dollar price of jeans and the relative price of jeans are both nominal variables. b. The dollar price of jeans and the relative price of jeans are both real variables. c. The dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. d. The dollar price of jeans is a real variable; the relative price of jeans is a nominal variable.