In a progressive income tax system
A) the marginal tax rate exceeds the average tax rate.
B) the average tax rate exceeds the marginal tax rate.
C) high income earners pay a lower percentage of their income in taxes than do low income earners.
D) the tax rate depends solely on how long an individual has been in the labor force.
Answer: A
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If the economy is operating on the long-run aggregate supply curve, then expansionary fiscal policy will
A) generate higher prices in the short run, but will induce aggregate supply to increase in the long run. B) generate an increase in real GDP and higher prices in the short run, but then real GDP will decrease to its long-run level, and the price level will increase some more. C) generate an increase in real GDP without higher prices in the short run, but then real GDP will return to its long-run level, and the price level will increase. D) generate an increase in real GDP and higher prices in both the short run and the long run.
When the federal government discovers that its tax revenues have fallen short of its planned spending, interest-bearing IOUs are printed and sold on the market by
a. the Federal Reserve b. the FDIC c. the Treasury Department d. Congress e. Department of Commerce
Over the last ten years productivity grew faster in Mapoli than in Romeria while the population and total hours worked remained the same in both countries. It follows that
a. real GDP per person grew faster in Mapoli than in Romeria. b. real GDP per person must be higher in Mapoli than in Romeria. c. the standard of living must be higher in Mapoli than in Romeria. d. All of the above are correct.
In developing countries, the government's revenues are:
A. no more limited than in developed economies. B. limited because even though the government can readily collect taxes, the tax base is too small. C. limited because of the small tax base and the government's inability to collect taxes. D. limited because the tax base is too large and the government lacks the institutional ability to collect taxes.