A progressive income tax system is particularly effective as an automatic stabilizer because
A. In a booming economy, taxpayers move into higher tax brackets, which restrains their spending.
B. During a recession, it causes the budget deficit to fall.
C. It falls more heavily on taxpayers with high MPCs, which stimulates aggregate demand.
D. It reduces demand when income falls.
Answer: A
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In the one-period competitive model we have been studying
A) both consumption and total factor productivity are exogenous. B) consumption is exogenous and total factor productivity is endogenous. C) consumption is endogenous and total factor productivity is exogenous. D) both consumption and total factor productivity are endogenous.
For the Fed, price stability means a low and stable rate of inflation
a. True b. False
A dividend is
a. a payment to the corporation's bondholders b. the same as the profit of the corporation c. a payment of a portion of the corporation's profits to the shareholders d. guaranteed if one has common stock e. the payment to each partner in a partnership form of business
The production possibilities frontier provides an illustration of the principle that
a. trade can make everyone better off. b. governments can sometimes improve market outcomes. c. people face trade-offs. d. people respond to incentives.