The marginal tax rate is
A. the fraction of an additional dollar of income that must be paid in taxes.
B. the average amount of government spending that is financed by taxes.
C. the total amount of taxes paid divided by after-tax income.
D. the total amount of taxes paid divided by before-tax income.
Answer: A
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Assume that your roommate is very messy. According to campus policy, you have a right to live in an uncluttered apartment. Suppose she gets an $80 benefit from being messy but imposes a $60 cost on you. The Coase theorem would suggest that an efficient solution would be for your roommate to
a. stop her messy habits or else move out. b. pay you at least $60 but less than $80 to live with the clutter. c. continue to be messy and force you to move out. d. demand payment of at least $60 but no more than $80 to clean up after herself.
When the Federal Reserve conducts open-market operations to increase the money supply, it
a. redeems Federal Reserve notes. b. buys government bonds from the public. c. raises the discount rate. d. decreases its lending to member banks.
An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:
A. demand curve for cigarettes rightward. B. demand curve for cigarettes leftward. C. supply curve for cigarettes rightward. D. supply curve for cigarettes leftward.
If Bob can complete mathematics homework assignments at a lower opportunity cost than Jane can accomplish, then Bob has ________ in completing mathematics homework assignments.
A. an absolute advantage B. a relative disadvantage C. a complete advantage D. a comparative advantage