Tax revenues can rise as a result of a decrease in income tax rates, as long as the tax base increases sufficiently
Indicate whether the statement is true or false
True
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The economy suffered a mild recession in 2001. Despite the recession, home sales and durable goods sales remained high. Which of the following is a plausible explanation?
A) The Fed's pursuit of contractionary policy stimulated these markets. B) The Fed caused a reduction in the federal funds rate to its lowest level in 40 years. C) Home building and consumer durable purchases are always high during a recession. D) Rising inflation encouraged many to invest in the real estate market.
In many developing countries, starting a business involves navigating a labyrinth of rules and regulations and red tape. Paying a bribe to expedite paperwork is a common practice
As Samuel Huntington puts it—"the only thing worse than a society with a rigid, overcentralized, dishonest bureaucracy is one with a rigid, overcentralized, honest bureaucracy." The argument is that bribes increase economic activity because, without bribes to grease bureaucrats' palms, starting a business would be an extremely long, drawn-out process and would probably drive investors away. Is this always the case, or does bureaucratic corruption involve other costs? Explain your answer.
The entrance of the U.S. into the Korean War in June of 1950 led to:
a. deflation. b. an increase in the unemployment rate. c. a long and deep recession. d. a surge in consumer demand. e. All of the above.
The money multiplier works best if all transactions in the economy are made through the banking system
a. True b. False Indicate whether the statement is true or false