Discuss the advantages of using an income tax system such as the one discussed in this chapter, as opposed to a consumption tax.
What will be an ideal response?
Using income as the unit of taxation allows for progressivity in the tax code. However, a
consumption tax encourages savings which is not the case in a standard income tax.
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Which of the following statements is FALSE?
A. An increase in income causes the demand curve for an inferior good to shift to the right. B. An increase in income causes an increase in the demand for a normal good. C. An increase in income causes a decrease in the demand for an inferior good. D. A decrease in income causes the demand curve for a normal good to shift to the left.
An increase in money demand will shift the
A) IS curve to the left. B) IS curve to the right. C) LM curve to the left. D) LM curve to the right.
How does a residual claimant help to resolve the problems faced by independent specialized workers?
If investment spending increases due to increased optimism in the business sector, which of the following would occur?
a. an increase in GDP, an increase in the price level, an increase in money demand, and an increase in the interest rate b. an increase in GDP, a decrease in the price level, an increase in money demand, and a decrease in the interest rate c. a decrease in GDP, a decrease in the price level, a decrease in money demand, and a decrease in the interest rate d. a decrease in GDP, a decrease in the price level, an increase in money demand, and an increase in the interest rate e. an increase in GDP, an increase in the price level, a decrease in money demand, and a decrease in the interest rate