How do governments use spending and taxation to reduce inequality and poverty in an economy?
What will be an ideal response?
The government uses progressive taxation and transfer payments in order to reduce inequality and poverty in the economy. Transfer payments refer to payments from the government to certain individual groups, such as the elderly or the unemployed. Social security, Medicare, and Supplemental Security Income are all examples of transfer payments. A progressive tax system is one in which marginal tax rates increase as incomes increase, so that the rich face higher marginal tax rates than the less well-to-do.
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Suppose we observe that both the equilibrium price of film cameras and the equilibrium quantity of film cameras have fallen. Which of the following could be responsible for this?
A) Consumers' preferences changed in favor of digital cameras. B) technological advances in film camera production C) Workers who make cameras received a pay raise. D) The price of digital cameras increased.
A network externality is:
A. a direct effect on an economic decision maker. B. an uncompensated effect on someone other than the person who caused it. C. an indirect effect on an economic decision maker. D. the effect that an additional user of a good or participant in an activity has on the value of that good or activity for others.
A nation's international investment position shows its stock of international assets and liabilities at a point in time.
Answer the following statement true (T) or false (F)
If velocity is equal to 1, this means that
A. each dollar of the money supply is spent on the average one time per year. B. an increase in the money supply will lead to an increase in aggregate supply of 1. C. for every 2 dollars of the money supply, nominal Gross Domestic Product (GDP) will increase by 1. D. the rate of growth of the money supply is 1.