Use the idea of interpersonal comparisons of utility to argue for a progressive income tax system where people in higher income brackets are charged higher tax rates on their extra income
Since the marginal utility of money diminishes for each individual, it seems reasonable to suppose that the utility a rich person derives from his/her marginal dollar is less than the utility a poor person derives from his/her marginal dollar. If the rich person doesn't get as much utility from his/her marginal dollar, then it won't hurt them as much to tax it away as it would hurt a poor person.
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In the figure above, the shift in the supply curve for U.S. dollars from S0 to S1 could occur when
A) the U.S. interest rate rises. B) foreign interest rates rise. C) the expected future exchange rate falls. D) the current exchange rate rises.
According to the crowding-out effect, a budget deficit will lead to:
a. reduced investment spending and a reduction in long-term economic growth. b. reduced investment spending and an increase in long-term economic growth. c. increased investment spending and a reduction in long-term economic growth. d. increased investment spending and an increase in long-term economic growth.
In a market in which the government has set a price ceiling below the equilibrium price:
A. there will be excess supply. B. the quantity demanded will equal quantity supplied. C. a black market might develop. D. quantity supplied will exceed quantity demanded.
The tax revenue collected can be calculated by ______.
a. subtracting the amount of the tax from market price and adding surpluses b. adding consumer and producer surpluses and dividing by market price c. subtracting production expenses from market price d. multiplying the amount of the tax times the quantity of the good sold