Personal income taxes
a. make recessions and inflationary episodes more severe
b. make recessions and inflationary episodes less severe
c. make recessions more severe and inflationary episodes less severe
d. make recessions less severe and inflationary episodes more severe
e. have no effect on the severity of recessions and inflationary episodes
B
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The income elasticity for most staple foods, such as wheat, is known to be between zero and one
a. As incomes rise over time, what will happen to the demand for wheat? b. What will happen to the quantity of wheat purchased by consumers? c. What will happen to the percentage of their budgets that consumers spend on wheat? d. All other things equal, are farmers likely to be relatively better off or relatively worse off in periods of rising incomes?
In the short-run macro model, an increase in government spending
a. may reduce real GDP b. partially crowds out private investment spending c. usually crowds out exports d. usually crowds out spending on services e. requires an increase in taxes
ATC always exceeds AVC
Indicate whether the statement is true or false
Within the framework of the AD/AS model, if consumers and investors become more pessimistic about the future direction of the economy, this will lead to
a. an increase in aggregate demand. b. a decrease in aggregate demand. c. an increase in long-run aggregate supply (LRAS shifts to the right). d. a reduction in the natural rate of unemployment.