Dynamic tax analysis is based on the recognition that as tax rates are increased
A) tax revenue collections will eventually decline.
B) tax revenue collections will continually increase.
C) tax revenue collections will change at the same rate as the tax rates.
D) tax revenue collections will increase at a faster rate than the tax rate change.
Ques. 2A small reduction in a country's growth rate is a concern to policy makers because
A) a small change can have large effects on per capita GDP over time.
B) a reduction usually leads to future reductions until finally the economy stagnates.
C) policy makers focus too much on economic growth and not enough on increasing savings rates.
D) the larger GDP is the better the economic welfare will be in the future.
Ques. 3Graphically, the effects of an external cost can be shown as
A) a leftward shift of the market demand curve.
B) a leftward shift of the market supply curve.
C) a downward movement along the market demand curve.
D) a rightward shift of the market supply curve.
Ques. 4Explain the differences between the public debt and the government budget deficit.
What will be an ideal response?
Ques. 5Ways to ration goods include
A) first-come, first-served.
B) political power.
C) prices.
D) all of the above.
Ques. 6Assuming coffee and cola are substitutes, if the price of coffee rises
A) there is a movement along the demand curve for cola.
B) the demand curve for coffee will shift to the right.
C) the demand curve for cola will shift to the right.
D) the demand curve for coffee will shift to the left.
Ques. 7Which of the following will most likely happen when better technology is used in production?
A) an upward movement along the production possibilities curve
B) an outward shift of the production possibilities curve
C) an inward shift of the production possibilities curve
D) a downward movement along the production possibilities curve
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