A senator states: "We need to cut taxes in order to increase incentives to work and produce, so that we can pull the nation out of this economic slump." A mainstream economist who is a critic of this policy would likely reply that:
A. Rather than cutting taxes there should be a decrease in government spending to address the problem
B. Rather than cutting taxes, monetary policy should become tighter to control the inflation rate
C. Increasing government spending is a surer way to increase production and pull the nation out of this economic slump
D. Cutting taxes will only reduce output further, and aggravate the situation
C. Increasing government spending is a surer way to increase production and pull the nation out of this economic slump
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The statement that "repaying our enormous national debt will ruin the nation" is
a. true, because taxes will have to go up by such large amounts that American citizens will have very little income to live on. b. true, because most of our national debt is owed to foreigners. c. false, because the government will take emergency measures to prevent national bankruptcy. d. false, because each time the principal on the debt comes due, the U.S. Treasury rolls it over by issuing more debt.
Suppose George's income is $10,000 and he pays a tax of $1,000, but Laura's income is $50,000 and she pays a tax of $4,000. Such a tax is:
A. regressive. B. progressive. C. proportional. D. flat.
If the value of the Gini coefficient increased between any two-year period of time, this means that income inequality __________ between these two years.
a. decreased
b. increased
c. stay the same
A price floor above the market clearing price typically results in I. an excess quantity supplied II. a shortage III. an excess quantity demand
A) I only B) II only C) III only D) II and III only