With a flat tax,
A. Decisions are based on economic considerations rather than tax incentives.
B. Everyone pays the same amount of absolute tax.
C. The government's ability to change the mix of output is increased.
D. Vertical inequities cannot occur.
Answer: A
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If unplanned investment is positive, firms will ________ production and output will ________
A) cut; rise B) cut; fall C) increase; rise D) increase; fall
A liquidity trap occurs when the
a. LM curve is steep. b. LM curve is vertical. c. LM curve is relatively flat. d. IS curve is flat.
The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium
If the government establishes a $2 per gallon price ceiling to ensure that children are nourished, estimate the change in p, Q, and social welfare.
The changes contained in the Tax Relief Act of 2001 included
A. More tax brackets to increase vertical equity. B. A partial shift from corporate to personal taxes. C. New loopholes to encourage education D. Narrowing the tax base.