Why did President Obama want to repeal the Bush era tax cuts on upper income taxpayers? How would the repeal of these tax cuts impact aggregate demand and to what degree? How did the economic conditions in 2010 make such a repeal less likely to take place?
What will be an ideal response?
President Obama wanted to repeal the Bush tax cuts on upper income taxpayers in order to decrease the size of the federal budget deficit and also to reduce income inequality. Repealing these tax cuts would amount to an increase in taxes, which would decrease aggregate demand. From an economic perspective, any factor that led to a decrease in aggregate demand would be an unwelcome suggestion since a recessionary gap existed leading up to 2010. However, since the upper income households typically save a greater portion of their incomes than lower-income households, the MPC for the former group would be somewhat lower, which would limit the impact of such a tax increase in terms of the multiplier.
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In 2009, the Social Security System ran a surplus of approximately $137 billion.
Answer the following statement true (T) or false (F)
Suppose the market price of corn is $5.50 per bushel. What are the three conditions that will need to be satisfied for the corn market to be in equilibrium at this price?
What will be an ideal response?
When members of an oligopolistic industry agree to collude, raising their product price substantially above average cost, the passage of time (months and years)
a. is usually needed for the members to solidify their cooperation. b. usually results in finer control of prices and markets by the group and larger profit margins. c. is likely to erode the agreement, as ways to cheat are developed by some participants and new entry is encouraged by the high price. d. seldom has any impact on the agreement, as long as the participants maintain high profit levels as a result of the agreement.
Imposing a quota on the import of a good is preferable to a tariff because a tariff creates a deadweight loss while a quota does not
a. True b. False Indicate whether the statement is true or false