A: Which of the following characteristics of a central bank is expected to enhan
ID: 1123093 • Letter: A
Question
A: Which of the following characteristics of a central bank is expected to enhance monetary policy credibility?
1: The central bankers' short terms that coincide with the terms of the legislature
2: Daily central bank actions that are subject to the review and veto of the executive branch of the government
3: The central bank announcing a numerical inflation target
4: The central bank's obligation to finance the national deficit
B: A tax increase that affects both aggregate demand and potential output is predicted to _____ the long-run equilibrium level of output, while inflation _____.
1: decrease; increases
2: increase; decreases
3: decrease; may increase, decrease, or remain unchanged
4: decrease; decrease
C: The marginal tax rate is:
1: total taxes divided by total before-tax income.
2: the average tax rate divided by the total tax rate.
3: the amount by which taxes increase when before-tax income rises by one dollar.
4: the tax rate at which the benefit of an extra dollar of taxes equals the cost of an extra dollar of taxes.
D: Lower taxes on interest income:
1: permanently lower growth rates by encouraging saving rather than consuming.
2: increase growth rates by increasing consumption rates.
3: increase growth rates by increasing saving and thus investment.
4: lower growth rates by reducing government expenditures.
E: Evidence from work hours and marginal tax rates in different countries suggests that:
1: higher marginal tax rates encourage more work hours.
2: lower marginal tax rates encourage more work hours.
3: marginal tax rates are not related to work hours.
4: higher average tax rates encourage more work hours.
F: A reduction in the marginal tax rate can cause potential output to increase by:
1: encouraging early entry into the labor market by reducing the incentive to earn advanced degrees.
2: increasing after-tax wage rates and thus allowing workers to work fewer hours.
3: increasing the incentive to invest more in education and earn advanced degrees.
4: increasing government revenues and thus government expenditure.
G: If the rate of inflation equals zero, then the real rate of interest:
1: equals zero.
2: equals the nominal rate of interest.
3: can be negative.
4: equals the target real interest rate.
H: The average tax rate is:
1: total taxes divided by total before-tax income.
2: the average tax rate divided by the total tax rate.
3: the amount taxes increase when before-tax income rises by an additional dollar.
4: the tax rate at which the benefit of an extra dollar of taxes equals the cost of an extra dollar of taxes.
I: A supply-side policy is a policy that:
1: shifts the short-run aggregate supply curve.
2: shifts the long-run aggregate supply curve.
3: shifts the aggregated demand curve.
4: prevents recessionary gaps that shift the AS curve.
J: Which of the following statements about inflation targeting is true?
1: Inflation targets have only been used in developed countries.
2: Inflation targets are always met.
3: Inflation targets have been used in both developed and developing countries.
4: Inflation targets increase uncertainty.
Explanation / Answer
A.
3: The central bank announcing a numerical inflation target
the above is answer
B.
3: decrease; may increase, decrease, or remain unchanged
the above is answer
C.
the amount by which taxes increase when before-tax income rises by an additional dollar
the above is answer
D.
increase growth rates by increasing saving and thus investment
the above is answer
E.
lower marginal tax rates encourage more work hours
the above is answer
we do only first 4-5 parts based on Chegg rule.
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