Average Tax Rate Tax Revenue ($B) 20% $250 40 300 60 250 80 200 Refer to the table. If the current tax rate is 60 percent, supply-side economists would advocate Multiple Choice lowering tax rates to 20 percent, or lower if possible. lowering tax rates to 40 percent. keeping tax rates at 60 percent. raising tax rates to 80 percent.

Average Tax Rate Tax Revenue ($B) 20% $250 40 300 60 250 80 200 Refer to the table. If the current tax rate is 60 percent, supply-side economists would advocate Multiple Choice lowering tax rates to 20 percent, or lower if possible. lowering tax rates to 40 percent. keeping tax rates at 60 percent. raising tax rates to 80 percent.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 4DQ

See similar textbooks

Similar questions

Identify one fiscal policy action that could counter the effects identified in part (a). Explain how this policy will affect each of the following. Output Employment The price level
CANBERRA, AUSTRALIA - Australia's prime minister achieved an important political victory on Thursday when the Senate passed personal income tax cuts worth 144 billion Australian dollars ($106 billion) over a decade. The tax cuts for most of Australia's workforce were a centerpiece of Prime Minister Malcolm Turnbull's annual budget plans revealed in May. That budget is expected to be the last before Turnbull's conservative coalition seeks another three-year term at elections due by early next year. The center-left opposition Labor Party supported the proposed initial tax relief for low- and middle-income earners beginning next month. But it opposed a third and a final stage of the plan that reduces taxes of those with incomes from AU$120,000 to AU$200,000 beginning in mid-2024. Turnbull on Wednesday refused to split the legislation so that the Senate could reduce taxes for those on lower incomes but not for higher-income earners. The Senate had to pass or reject the changes in their…
Supply-side fiscal policy initiatives include the following items EXCEPT: Group of answer choices R&D tax credits Education policies (subsidies or tax breaks) Lower corporate profit tax rates Open market operations
Oregon Hikes Cigarette Tax by $2 Last November Oregon voters overwhelmingly approved higher taxes on cigarettes and a new tax on e-cigarettes. Effective January 1, 2021, the state tax on a pack of cigarettes jumped from $1.33 to $3.33, the sixth-highest state tax in the nation. That will bring the average retail price up to $8.33 a pack, almost a 32 percent increase. State officials are expecting a tax windfall of $135 million in 2021 from the higher taxes. That assumes Oregonians continue to buy cigarettes at the same rate. Economists warn, however, that smokers reduce cigarette purchases when prices go up. Typically, unit sales decline by 4 percent when cigarette prices go up by 10 percent. The drop in unit sales may be larger in Oregon, as residents will have the option of purchasing smokes from other states, Indian reservations, and online. Source: Media reports of November 2020–February 2021. According to the News Wire, Instructions: Round your responses to one decimal…
Supply-side fiscal policies focus on improving the incentives to work, save, and invest. Group of answer choices True False
Over the past few months, A Government has made several policy pronouncements aimed at restoring the fiscal health of The economy These policies include: Reduction of VAT from 12% to 10%; Increasing the minimum wage from $210 per week to $260 per week; and Introducing a broad range of price controls. Using the short-run supply and demand curves, please draw and explain the impact of each of these policy measures on the market. When combined, will the impact of these policies make the economy better or worse?
Choose the correct answer: .Taxes are reduced by $50 billion and income increases by $1,000 billion. The value of the tax multiplier is: -4. (B) -20. (C) -10. (D) -5.
When supply-side economists propose cuts in tax rates, most mainstream economists are likely to take the position that they will be: Group of answer choices Effective because the supply-side effects will outweigh the demand-side effects Effective because the demand-side effects will outweigh the supply-side effects Ineffective because the demand-side effects will outweigh the supply-side effects Ineffective because the demand-side and supply-side effects will offset each other
MULTIPLE CHOICE Which one of the following statements regarding fiscal policy and the budget is correct? (a) When the government plans to stimulate economic activity, it can increase spending or reduce taxes; (b) Revenue from tax is always greater than government spending in South Africa; (c) Demand management only refers to fiscal policy; (d) A contractionary fiscal policy should be implemented to combat unemployment.
To minimize dead weight loss resulting from taxation, a. tax revenue should be maximized. b. tax rates should alternate between 0 and higher rates every other year. c. tax rates should be kept stable over time. d. tax rates should increase in times of need and reduced in other periods.
A simultaneous increase in taxes and increase in government spending would result to the following:
Identify one fiscal policy action that could counter the increase in investments. Explain how this policy will affect each of the following.i. Output ii. The price level iii. Nominal interest rates