Provide the definition for a regressive tax and give an example
What will be an ideal response?
A regressive tax is one in which the burden, as expressed as a percentage of income, falls as income increases. Excise taxes are typically regressive because higher-income individuals save a larger fraction of their income
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Total profit is maximized
a. where the difference between total revenue and total cost is greatest. b. at that output level where marginal revenue equals average cost. c. where total revenue is at a maximum. d. at the point where all variable costs are covered.
An increase in nominal GDP (with inflexible prices) results in:
a. an increase in the nominal rate of interest. b. an increase in the U.S. dollar exchange rate. c. a decrease in the nominal rate of interest. d. increased price and wage flexibility.
Proponents of fixed exchange rates, who argue that these rates eliminate uncertainty and therefore promote international trade, sometimes fail to recognize that:
A. exchange rates do not matter to businesses, so the uncertainty has no impact. B. fixed exchange rates are more volatile than flexible exchange rates. C. fixed exchange rates may not remain fixed forever. D. international trade is bad for the economy and should not be promoted.