A local government currently has a tax base of $10 billion and a tax rate of 10 percent. If the tax rate is increased to 12 percent, the tax base becomes $8.5 billion. If the goal is to maximize tax revenues the tax rate should be
A) raised above 12 percent.
B) kept at 10 percent.
C) raised to 12 percent.
D) abolished.
B
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A main reason why the U.S. trade deficit grew so large from 1997 to 2000 was that
A. Congress removed all tariffs and trade restrictions on imports. B. NAFTA was introduced and Mexican exports flooded the United States. C. the international value of the dollar fell during the 1990s, which encouraged U.S. exports. D. the international value of the dollar rose in the last half of the 1990s, which encouraged U.S. imports and damaged U.S. exports.
The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the total subsidy paid to tomato farmers?
A) area E B) area B + area C + area D + area F C) area C + area D + area E + area G D) area A E) area F
Firms in a small economy planned that inventories would grow over the past year by $500,000. Over that year, inventories did grow by exactly $500,000. This implies that
A) aggregate expenditure that year was equal to GDP that year. B) there was an unplanned increase in inventories that year. C) aggregate expenditure that year was greater than GDP that year. D) there was an unplanned decrease in inventories that year.
Technology is now being developed so that road use can be priced by computer. A computer in the surface of the road picks up a signal from your car and automatically charges you for the use of the road. How would this affect bottlenecks and rush-hour congestion?
A. It would decrease bottlenecks and rush-hour congestion. B. It would decrease bottlenecks but increase rush-hour congestion. C. It would increase bottlenecks and rush-hour congestion. D. It would increase bottlenecks but decrease rush-hour congestion.