If a person were in the 15% tax bracket and given the choice of a $500 credit or a $2500 deduction,
A. he would not qualify for either.
B. he would not care. They would constitute the same tax benefit.
C. he would take the credit every time.
D. he would take the deduction every time.
Answer: C
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When the economy suffers a temporary negative supply shock and the central bank responds by changing the autonomous component of monetary policy to keep inflation at the target inflation rate, then
A) aggregate output drops in the short run. B) output will return to potential output over time. C) aggregate output is stabilized. D) all of the above. E) both A and B.
Regarding wage differences among various groups of workers — blacks and whites, men and women, etc. — most economists believe that
a. no such differences are evident from the available data. b. most of the differences are attributable to discrimination. c. some of the wage differences are attributable to discrimination, but there is disagreement about how much. d. none of the differences are attributable to discrimination.
Sue sells a futures contract for U.S. Treasury bonds and on the settlement date the interest rate on U.S. Treasury bonds is lower than Sue expected. Sue will have:
A. lost money on her short position. B. gained money on her short position. C. gained money on her long position. D. lost money on her long position.
The biggest problem caused by a deflation is that:
A. prices fall. B. wages fall. C. people cannot repay their debts. D. interest rates rise.