Explain the interaction between inflation and tax revenues. Did the indexing of tax brackets in 1982 eliminate all of the negative effects of inflation on taxes?
What will be an ideal response?
Inflation interacts with tax revenues because if tax brackets are not indexed for inflation, then nominal increases in income due to inflation will lead to real tax increases as individuals are pushed into higher tax brackets. The indexing of tax brackets in 1982 eliminated most of the negative effects of inflation on taxes, but not all. That is because not all features of the tax code have been indexed for inflation, merely the tax brackets. For example, capital gains are based on nominal increases in the price of the asset sold, so inflation has the impact of increasing real taxes on capital gains without a vote by Congress.
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When expectations are rational,
a. a foreseen expansionary policy action does not alter output. b. there cannot be any inflation. c. a foreseen expansionary policy action changes output. d. there is zero unemployment.
In 1770,all the Townshend duties were repealed except_____
a. the duty on tea b. the duty on glass c.the duty on paper d.the duty on red and white lead
An increase in the number of producers will:
a. increase the market supply, because the price will rise. b. increase the market supply only when market demand increases too. c. increase the market supply, because market supply is the sum of all individual supply curves. d. increase the market supply only if each supplier has an identical supply curve. e. decrease the market supply, because firms compete with each other and each firm will supply more.
When political officials have substantial discretionary power to override the rule of law,
What will be an ideal response?