Last year you earned $20,000 and paid taxes in the second tax bracket at 15 percent. This year you earned $25,000, the extra $5,000 just compensating you for inflation. However, this year you paid taxes in the third bracket at 20 percent. This illustrates the concept of
A. Bracket creep.
B. Stagflation.
C. Deflation.
D. Speculation.
Answer: A
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In our modern financial system, money is created
A) only by central banks. B) only by the banking system. C) by central banks and the banking system. D) only by federal governments.
The value of the films starring Charlie Chaplin produced in the United States that still exist will not be included in this year's U.S. gross domestic product (GDP) because: a. Charlie Chaplin was not an American citizen
b. Charlie Chaplin did not make the films this year. c. the films earn less revenue. d. the films no longer have any value except to collectors. e. films are intermediate goods.
To prevent shortages of cash during a crisis, the Fed: a. saves up cash in bank vaults around the country and the world. b. reduces liquidity in the economy so that more cash can be saved. c. sells U.S. government securities to commercial banks
d. demands interest payments on reserves held at the Fed. e. increases the discount rate.
Fiscal policy is:
A. government decisions about the level of taxation and public spending. B. congressional budget office decisions. C. the decisions that affect the available money supply in the economy. D. government decisions about the level of the interest rate in the economy.