When higher taxes discourage whatever activity is being taxed, that is called
A. a multiplier effect.
B. tax discouragement.
C. a negative incentive effect.
D. tax abatement.
Answer: C
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If the money prices of resources changes
A) the LAS curve shifts. B) the SAS curve shifts. C) the AD curve shifts. D) the macroeconomic equilibrium is unaffected.
A bank faced with the wholesale loss of deposits is likely to shut down despite fundamentally sound balance sheet. Why could this be?
A) Banks have accountants that are too optimistic. B) Banks purposely lie about their balance sheets in order to attract more clients. C) Many bank assets are illiquid and cannot be sold quickly to meet deposit obligations without substantial loss to the bank. D) Many banks operate on a budget that exceeds their actual reserves. E) Many banks will shut down to preserve their interest profits.
If a 5 percent decrease in the price of a good produces a 5 percent increase in the quantity demanded, the price elasticity of demand is:
a. perfectly elastic. b. perfectly inelastic. c. elastic. d. inelastic. e. unitary elastic.
The U.S. distribution system is
A. identical to that of the former Soviet Union. B. based on a pure socialist economy. C. determined by a modified version of one dollar, one vote. D. similar to the fascist 1930's Germany.