In order to correct the problems associated with external costs,
A) the signals given to the economy must change so that decision-makers will take into account all the costs of their actions.
B) the government must take over production of industries that are responsible for most of the pollution.
C) standards must be established that make it illegal to pollute.
D) the prices of all goods must be raised so people will consume less of the world's resources.
A
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If you had a salary of $1,000,000, (a) how much Social Security tax would you have to pay and (b) How much Medicare tax would you have to pay?
What will be an ideal response?
Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs. Are these unfunded promises surprising according to economic theory?
a. Yes, political representatives have a strong incentive to levy taxes that are sufficient to cover the cost of all programs they favor. b. No, the unfunded promises reflect the shortsighted nature of the political process. c. Yes, political representatives generally favor balancing the government budget because this is best for the economy. d. No, even though debt financing often makes sense, politicians are reluctant to use it because it will damage their chances of being reelected.
Payments for goods and services that will be used up by households during the year are
A. investment expenditures for the production of output. B. made by firms to households and called national income. C. called consumption expenditures. D. for intermediate goods and are not counted in GDP.
Suppose an income tax is imposed that takes $1,000 from someone with an income of $20,000; $4,000 from someone with an income of $30,000; and $12,000 from someone with an income of $80,000. This tax would be classified as
A. a flat tax. B. proportional. C. regressive. D. progressive.