The unreported or illegal production of goods and services in the economy that is not counted in GDP is termed:
A. money laundering.
B. the underground economy.
C. disposable personal income.
D. indirect national income.
Answer: B
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"The Federal Reserve should raise interest rates in order to keep inflation at an acceptably low level" is a ________ statement about ________ policy.
A. normative; fiscal B. positive; monetary C. normative; monetary D. positive; fiscal
The use of chlorofluorocarbons in refrigerators and air conditioners is alleged to cause the destruction of the ozone layer that surrounds the earth and protects humans from ultraviolet radiation. Output of this substance has been restricted by a licensing system where producers have to bid in the open market for licenses to produce them in specified quantities. This is an example of dealing with externalities by
A. voluntary compliance. B. direct controls. C. taxes. D. cap-and-trade.
If the demand curve is less elastic than the supply curve, then:
A. the buyers will bear a greater tax incidence. B. the sellers will bear a greater tax incidence. C. the buyers will bear a smaller tax burden than sellers. D. the sellers will bear a greater tax burden than buyers.
Martha Stewart earns $4,000 and she wants to save it for retirement, which is 10 years away. She can either save it in a taxable account or put it into a Roth IRA. Suppose that Martha can receive an annual rate of return of 8 percent and her marginal tax rate is 25 percent. By the time she reaches retirement, how much money would she have in either option? NOTE: Martha has to pay tax on the $4,000, so she cannot put the full amount into either the taxable account or the Roth.
What will be an ideal response?