Indexing the tax system to take into account the effects of inflation would by itself
a. mean that only real interest earnings are taxed.
b. mean an end to taxing capital gains.
c. mean an increase in average tax rates.
d. All of the above are correct.
a
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Between September 2009 and September 2010, the recovery of private inventories, as shown in Figure 19.1, was far stronger than the overall economy's recovery from the Great Recession. Which is the most reasonable inference?
A) Persistently weak aggregate demand gave producers no alternative but to place current output into storage. B) Businesses overestimated the strength of the recovery, which lead to overstocking of inventories. C) Financial constraints had forced businesses to contract inventories by more than they otherwise would have chosen. The period beginning in September 2009 reflects the attempt by businesses to correct this. D) Generally poor weather conditions in the final months of the year in the northern hemisphere make it less costly to store goods than to transport them to consumers.
Physical and human capital investments are
a. different in that the opportunity for economic profit is present for physical capital but not for human capital investments. b. different in that human capital decisions do not involve future income considerations, while physical capital investments do. c. similar in that nonmonetary considerations play an equally important role in both. d. similar in that both involve forgoing current income (and consumption) in an effort to achieve higher future income (and consumption).
Colorado experiences a record snowfall during the winter season. What impact will this have on the market for snowmobiles?
a. The supply of snowmobiles will increase and the price of snowmobiles will fall. b. The demand curve for snowmobiles will decrease and the price of snowmobiles will fall. c. The supply of snowmobiles will increase and the price of snowmobiles will increase. d. The demand curve for snowmobiles will increase and the price of snowmobiles will rise.
Suppose currency traders believe that in the future, the United States will experience more rapid inflation than will Japan. The traders ______.
a. also believe that the U.S. dollar will soon appreciate in value b. will buy more U.S. dollars, pushing up the price c. holding U.S. dollars will convert them to yen, increasing the demand for yen d. also believe that Japanese consumers will soon demand more U.S. goods