According to the Laffer curve below, what would happen if we move from Point D to B? Taxes would increase, but tax revenue would stay the same. Both taxes and tax revenue would increase. O Both taxes and tax revenue would decrease. O Taxes would decrease, but tax revenue would stay the same.
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- Figure 8-24. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 9 Tax Revenue a∞rontm ~ - X 8 7 6 5 4 3 2 1 A B Refer to Figure 8-24. Tax revenue would [I B. All of the above are correct. A. decrease if the economy began at point C and then the tax rate was increased. Answer Key:B Tax Size OC. decrease if the economy began at point B and then the tax rate was decreased. D. increase if the economy began at point F and then the tax rate was decreased.Figure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.Economist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case?
- Give typing answer with explanation and conclusion Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is 15% per period. If the government wanted to see the effect of a tax cut of $50 billion, what would be the tax multiplier that they would have to use.Suppose the federal government gives taxpayers a tax cut financed by borrowing. If taxpayers their debts, total spending will: O decrease. O first increase and then decrease. O increase. O remain unchanged.By increasing the taxes by government, the value of consumption will increase. a. True O b. False
- Fl in the missing blanks in the folowing table. Assume for simplicity that taxes are zero. Also assume that the values represent bilions of dollars. National Income and Consumption (C) Saving (S) Real GDP (Y) $12,000 $10,800 $13,000 $11,700 $14,000 $12,600 $15,000 $13,500 $16,000 $14,400 In the above example, the marginal propensity to consume is (Enter your response rounded to two decimal places) In the above example, the marginal propensity to save is (Enter your response rounded to two decimal places)-If the government wants to expand aggregatedemand, it can _________ government purchases or_________ taxes.a. increase; increaseb. increase; decreasec. decrease; increased. decrease; decreaseSome politicians have suggested that the United States enact a constitutional amendment requiring that the Federal government balance its budget annually. Such an amendment, f strictly enforced, would force the government to enact a contractionary fiscal policy whenever the economy experienced a severe recession. This is because when the economy enters a recession, 0000 net tax revenue falls and transfer payments rise. Balancing the budget would require raising transfer payments and raising taxes. net tax revenue rises and transfer payments fall. Balancing the budget would require raising transfer payments and lowering taxes. net tax revenue falls and transfer payments rise. Balancing the budget would require lowering transfer payments and raising taxes net tax revenue rises and transfer payments fall. Balancing the budget would require lowering transfer payments and lowering taxes
- If the government decreases taxes this will shift the aggregate demand curve by government spending for goods and services and has a than a change in effect on real GDP. Select one: a. less; smaller b. more; smaller O c. less; larger d. more; largerWhich of the following is NOT a tool of fiscal policy. O taxes O government spending Onterest rates none of the above Question 2 Assume the economy is in a deep recession. The appropriate fiscal policy response would be to: raise taxes and raise govemment expenditures cut taxes and cut govermment expenditures raise taxes and cut government expenditures O cut taxes and increase government expenditures D Question 3 Crowding out refers to the fact that: Tax cuts will cause inflation O Tax cuts may result in higher interest rates which will "crowd out" business investment spending O increased government spending will crowd out spending on imports none of the aboveComplete the following table and answer one question. a. Assuming an 8 percent sales tax is levied on all consumption, complete the following table: Instructions: Round your responses for "Sales Tax" to the nearest whole number. Round your responses for "Percentage of Income Paid in Taxes" to one decimal place. Income Consumption $10,000 20,000 40,000 80,000 Sales Tax $11,000 $ 20,000 $ 1,400 36,000 $ 2,520 60,000 $ 4,200 x 770x Percentage of Income Paid in Taxes 7.7% 7.0% 6.3% X 5.3%
