Which of the following taxes is most likely to be shifted?
a. a property tax on an owner-occupied residence
b. a progressive income tax
c. a flat-rate state income tax
d. a general sales tax
d
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Crowding out refers to a decrease in government purchases as a result of an increase in private expenditures
Indicate whether the statement is true or false
The following appeared in a Florida newspaper a week after a hurricane hit the state. "Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding. Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path. Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in the article?
A) The hurricane caused an increase in the demand for building materials. B) The hurricane created an artificial shortage of building materials. C) There was a reduction in supply as firms shipped plywood and other materials to locations not affected by the storm. D) The hurricane reduced the number of suppliers of building materials.
Disposable income is
A) equal to GDP minus the capital consumption allowance. B) that portion of personal income that can be used for consumption and saving. C) the sum of all payments to suppliers of the factors of production. D) equal to national income. E) another term for personal income.
People behave rationally when they
A) follow the advice of government leaders. B) never have regrets about their decisions. C) make decisions they think will make themselves better off. D) make decisions with a focus only on financial outcomes.