Kim is paid $50,000 per year, and pays an annual income tax of 10 percent. Due to an inflation rate of 10 percent, her pay increases to $55,000, which puts her in a higher tax bracket where she must pay 20 percent. Which of the following can be said of Kim?
A. Inflation caused her to be taxed more heavily and decreased her purchasing power.
B. Inflation caused her to be taxed more heavily and increased her purchasing power.
C. Her raise reflects the inflation rate, and therefore her purchasing power is unchanged.
D. Inflation caused her to be taxed more but didn’t change her purchasing power.
A. Inflation caused her to be taxed more heavily and decreased her purchasing power.
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In the classical model with an open economy, an increase in the trade deficit as a result of a tax cut, causes a decline in the interest rate, attracting more loanable funds from abroad
a. True b. False
Perfect income equality is achieved if each population quintile receives what percent of income?
a. 20 percent b. 10 percent c. 75 percent d. 50 percent e. 100 percent
Which of the following is true about advertising?
A. Firms spend money on advertising in an attempt to make the demand curve more elastic. B. Advertising may be the only way that a new entrant can penetrate a market dominated by long-established firms. C. Advertising has no impact on entry costs or market structure. D. Firms consider advertising to be successful if it succeeds in lowering the long-run average cost.
In the simple circular flow
A. consumers trade resources for goods and services in the factor market. B. producers trade goods and services for monetary payments in the product market. C. consumers trade goods and services for monetary payments in the factor market. D. businesses trade goods and services for resources in the product market.