What is the "tax wedge"?
What will be an ideal response?
The "tax wedge" is the difference between the pretax and posttax return to an economic activity.
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Assuming all else equal, if a household is pessimistic about future income, it is likely to cause a(n):
A) shift in the current credit supply curve of the household to the right. B) downward movement along the current credit supply curve of the household. C) upward movement along the current credit supply curve of the household. D) shift in the current credit supply curve of the household to the left.
The quantity of a public good supplied by a private market is
A) smaller than the efficient quantity. B) equal to the efficient quantity. C) larger than the efficient quantity. D) the quantity that maximizes total public benefit.
Assuming a simultaneous reduction in income taxes and transfer payments of $50 billion, then aggregate disposable income will
a. be higher than before. b. be lower than before. c. remain constant. d. None of the above
"I like ice cream, but after eating homemade ice cream last night, I want to have something else for dessert today." This statement most clearly reflects
a. the budget constraint. b. consumer irrationality. c. the second law of demand: price elasticity increases with time. d. the law of diminishing marginal utility.