Question
positive, which increases tax receipts in relation to government expenditures. Budget deficits tend to grow during recessions because real GDP growth is positive, which increases tax receipts in relation to government expenditures. negative, which reduces tax receipts in relation to government expenditures. zero, which causes neither tax receipts nor government expenditures to grow. negative, which reduces transfer payments in relation to tax receipts. positive, which reduces both tax receipts and transfer payments. Governments in developing countries typically play a larger role in investment spending in their economies than do the governments of developed countries. Refer to Figure 13.2. If you were a member of Congress who wanted to increase the amount of taxes collected, what would you recommend if the current tax rate was 80 percent? Increase the tax rate to 100 percent. Decrease the tax rate to 30 percent. Decrease the tax rate to 70 percent. Increase the tax rate to 90 percent. Decrease the tax rate to 0 percent. Fiscal policy is an important tool used by the government to attain the path of economic growth. Assume that an economy has automatic stabilizers in place that include a progressive tax structure and a transfer payment system. In a period of high economic growth and high inflation, we would expect tax revenues to fall and unemployment compensation to rise. average tax rates and welfare payments to decline. the national debt to become larger. average tax rates and government revenues to rise. government spending on social security benefits to rise. When the price level increases, the effect of a change in government spending on real GDP is understated. The government surpluses in the late 1990s were largely the result of strong economic growth. Public-sector spending plays a much bigger role in developing countries than in industrial countries. If Bill earns $40,000 a year and pays $10,000 in taxes, and Mike earns $70,000 a year and pays $21,000 in taxes, we can conclude that this tax system is regressive. progressive. proportional. flat. marginal. The misery index is defined as potential GDP minus real GDP. the sum of the unemployment rate and the inflation rate. the difference between potential GDP and actual GDP. the unemployment rate minus the inflation rate. the inflation rate minus the unemployment rate.
Explanation / Answer
1. B
2. F
3. C
4. F
5. D
6. F
7.T
8. F
9. B
10. B
