When the tax rates imposed on the rich are high, a reduction in these rates
a. will always lead to a reduction in the tax revenue collected from the rich.
b. will not affect the tax revenue collected from the rich.
c. will increase the reported incomes of the rich and it may also lead to an increase in tax revenue collected from them.
d. will decrease the reported incomes of the rich, and thereby reduce the tax revenue collected from them.
C
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Refer to Figure 28-1. Suppose that the economy is currently at point A, and the unemployment rate at A is the natural rate. What policy would the Federal Reserve pursue if it wanted the economy to move to point C in the long run?
A) Sell treasury bills. B) Increase the money supply. C) Lower the discount rate. D) Buy treasury bills. E) No policy will move the economy to point C in the long run.
Long lags make discretionary policy less effective because
a. by the time the impact of a policy is felt, the problem may have been corrected by market forces. b. it is easier to forecast an expansion than a recession. c. it is easier to forecast a recession than an expansion. d. automatic stabilizers are subject to longer lags than are discretionary policies.
A professor at a university finds a way to reduce the costs of producing automobile glass. The method is very easy for anyone to copy. A company develops a substance which prevents eyeglasses from smudging. It receives a patent on the formula. Which of these are common technological knowledge?
a. the method to reduce costs of producing automobile glass, and the formula for the substance that prevents smudging b. the method to reduce costs of producing automobile glass, but not the formula for the substance that prevents smudging c. the formula for the substance that prevents smudging, but not the method to reduce costs of producing automobile glass d. neither the method to reduce costs of producing automobile glass nor the formula for the substance that prevents smudging
If China were to adopt a floating exchange-rate regime, it would:
A. cause the U.S. trade balance with China to fall. B. de-stabilize the entire world economy. C. cause the Chinese trade balance to fall. D. force the U.S. to adopt a fixed exchange rate to maintain the balance of trade.