A lump-sum tax, such as a $1000 tax that every family must pay one time, is
A. an autonomous tax.
B. negatively related to real GDP.
C. a regressive tax.
D. a type of income tax.
Answer: C
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Which of the following statements is incorrect?
A. Budget deficits raise the national debt. B. The concepts of deficit and debt are closely related. C. Getting rid of the deficit eliminates accumulated debt. D. Budget surpluses lower the national debt.
Suppose an economy originally in long-run equilibrium experiences a decrease in aggregate demand. According to the classical model
A. real Gross Domestic Product (GDP) will fall, and then the price level will fall also. B. the price level will not change but real Gross Domestic Product (GDP) will fall. C. real Gross Domestic Product (GDP) will fall, wages will fall, but the prices of goods and services will stay the same. D. real Gross Domestic Product (GDP) will not change but the price level will fall.
What is ‘market failure'? Explain one way in which government can help overcome such failure
What will be an ideal response?
Which of the following is true of the chained consumer price index?
a. It will generally result in a slightly lower figure for the measured annual rate of inflation than the regular consumer price index. b. It makes no allowance for shifts away from goods and services as they become more expensive. c. It considers only changes in the prices of household necessities such as food and clothing. d. It holds the quantities of the goods and services used to calculate the index constant over lengthy time periods.