A tax is said to be progressive if
a. the absolute size of the tax (in dollars) increases as income increases
b. the wealthy pay a smaller percentage of their income than the poor
c. the average tax rate falls as income rises
d. the proportion of income paid as taxes increases as income increases
e. the proceeds are used to pay for liberal political programs
D
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On Thanksgiving, Jake's mother gives him a huge platter of food. If Jake were to keep eating just to please his mother (even when he really wanted to stop long ago), his marginal utility of eating that last bite would be
a. the same as his total utility b. large c. minus one d. positive e. negative
Which of the following is not an example of a moral hazard problem?
a. A manager stays late one evening so that her employee can leave early to attend his child's music recital. b. A small child takes an extra cookie from the cookie jar when he thinks his mom isn't watching him closely. c. An employee plays solitaire on her computer at 4:30 p.m. on a Friday when her boss has left for the day. d. A customer whose new eyeglasses come with a "60-day insurance policy in case of breakage" leaves her glasses out where her new puppy can chew on them.
In a market system, the most dangerous types of bankruptcies involve
A. industrial monopolies. B. multinational firms. C. employment agencies. D. financial institutions.
Suppose that the bank has the following balance sheet:
Assets Liabilities Reserves $75,000 Deposits $500,000 Loans $430,000 Net worth $5,000 If the required reserve ratio is 10 percent, what is the maximum the bank can loan out? Suppose the bank makes this loan and the borrower spends the money, which is deposited in a different bank. Show the impact of these transactions on the bank's balance sheet. What will be an ideal response?