In 1991 the federal government changed the withholding amounts for personal taxes. The change meant that people wouldn't have as much withheld from their paychecks. But there was no change in the tax code itself, so the amount of tax due in April 1992 was not changed. How would consumption and saving respond to this withholding change? (Note: you may assume a real interest rate of 0%.)
What will be an ideal response?
This is just a Ricardian equivalence example. People would not change their consumption, but would increase saving by the amount of the withholding change, so that they would have the same consumption pattern over time.
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A) an open market sale of government bonds. B) to do nothing. C) an open market purchase of government bonds. D) to increase reserve requirements.
Forecasts based on an economic theory as opposed to historical data are called
A) causal econometric forecasts. B) non-time-series forecasts. C) dummy forecasts. D) explanatory variable forecasts.
What are the major criticisms of the Lorenz curve?
What will be an ideal response?
Senior citizens can buy movie tickets at a lower price than the general public. This is an example of
A) age discrimination. B) demand discrimination. C) price discrimination. D) price differentiation.