Because the income tax structure is progressive, the amount of taxes paid is a _____
a. constant fraction of income throughout the business cycle
b. larger fraction of income in expansions than in contractions
c. smaller fraction of income in expansions than in contractions
d. decreasing function of income in both expansions and contractions
e. constant amount at all levels of output and income
b
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If the nominal interest rate is greater than the real interest rate in an economy:
A) the real interest rate must be negative. B) inflation must be positive in the economy. C) inflation must be zero in the economy. D) inflation must be negative in the economy.
Suppose Country A has a high average wage level and a high level of output per person, while Country B has a low average wage level and a low level of output per person. Which country can benefit from trade?
a. Only Country A can benefit. b. Only Country B can benefit. c. Both Country A and Country B can benefit. d. Neither Country A nor Country B can benefit.
Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles, and you are the only firm providing this service. High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand. Your monopoly would result from:
a. increasing returns to scale. b. technological superiority. c. control of a scarce resource or input. d. government-set barriers.
Which of the following effects will not increase (i.e., shift to the right) the aggregate supply curve?
a. An increase in the average national price level. b. A decrease in the price of fuel. c. An appreciation of the domestic currency. d. All of these answers are correct. e. None of these answers is correct.