A theory of taxation that states that ________ is the ability-to-pay principle.
A. taxpayers should contribute to the government in proportion to the benefits they receive from public expenditures
B. taxpayers should contribute to the government in a smaller proportion than the benefits they receive from public expenditures
C. taxpayers should contribute to the government in a greater proportion than the benefits they receive from public expenditures
D. citizens should bear tax burdens in line with their ability to pay taxes
Answer: D
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Economic theory assumes people are always rational. Yet observation indicates that people do not always behave rationally. Which of the following is not a systematic mistake people make in their decisionmaking?
a. People often interpret information to fit beliefs already held. b. People place too much emphasis in their decisionmaking on a few extreme situations of which they are aware. c. People tend to view current prices differently than they view future prices. d. People are too sure of their own abilities.
When a labor supply curve is backward-bending, the elasticity of labor supply in the backward-bending portion is
A. Negative. B. Greater than 1. C. Zero. D. Positive but less than 1.
Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?
A. An increase in supply with a decrease in demand will result in an increase in price. B. An increase in supply with no change in demand will result in an increase in price. C. An increase in supply with no change in demand will result in a decline in sales. D. An increase in demand with no change in supply will result in an increase in sales.
Which of the following is a positive statement?
A. When tax revenues are less than government spending there is a budget deficit. B. Inflation is the most damaging thing that can occur in an economy. C. We need to carefully protect our borders. D. Foreign aid should be reduced to help reduce the national debt.