Every tax has two parts: a(n) ________ and a(n) ________.
A. incidence; rate
B. base; incidence
C. rate structure; excess burden
D. base; rate structure
Answer: D
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A borrower and a lender agree on a mortgage interest rate. If inflation turns out to be less than expected
A) the actual real interest rate will exceed the expected real interest rate. B) the actual real interest rate will be less than the expected real interest rate. C) the actual nominal interest rate will be higher than expected. D) the actual nominal interest rate will be less than expected.
Suppose the tax rate on the first $10,000 of income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on income over $60,000. Family A has an income of $55,000. What is the tax
liability of Family A? A) $16,500 B) $6,600 C) $7,500 D) $3,400
Which of the following types of goods tend toward elastic demand?
a. luxuries b. durable goods c. goods with multiple uses d. All of these.
"Expansionary fiscal policy is always 100 percent effective when the short-run aggregate supply curve is horizontal." Is this statement TRUE?
A) yes, because theoretically nothing else can offset the effects of fiscal policy B) yes, when the long-run aggregate supply curve is horizontal too C) no, because crowding out could take place D) no, because the increased spending may cause the price level to increase