If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:
A. regressive.
B. progressive.
C. proportional.
D. optional.
Ans: C. proportional.
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In a fixed exchange rate system, a decrease in the exchange rate at which a currency is pegged is called a(n)
A) devaluation. B) revaluation. C) appreciation. D) depreciation.
According to the household liquidity effect, higher stock prices lead to increased consumption expenditures because consumers
A) feel more secure about their financial position. B) want to sell stocks and spend the proceeds before stock prices fall. C) believe that their wages will increase due to increased profitability of firms. D) can now afford more expensive imports.
Tax expenditures can be viewed as government spending through the tax code
a. True b. False
Classical economists believed that if saving were greater than investment, the interest rate would _____, causing saving to _____ and investment to _____ until the two were equal
a. rise; decrease; increase b. fall; decrease; increase c. fall; increase; decrease d. rise; increase; decrease e. fall; increase; increase