People with fixed incomes fare best in an inflationary period.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2He who pays a tax should receive the benefit from the expenditure financed by the tax. This statement reflects which of the following principles for a tax?
a. Fairness of contribution.
b. Ability-to-pay.
c. Benefits-received.
d. Inexperience-to-collect.
QUESTION 3Explain why rational expectations theorists do not support government intervention to alleviate unemployment. Explain their views on the effectiveness of fiscal policy and monetary policy.
QUESTION 4Changes in the quality of some goods and services, such as electromechanical calculators, are thought to give a downward bias to the consumer price index.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5It would be an undue hardship to require people whose income is below 15,000 per year to pay income taxes. This statement reflects which of the following principles for a tax?
a. Benefits-received.
b. Inexpensive-to-collect.
c. Ability-to-pay.
d. Fairness of contribution.
QUESTION 6What is the difference between the Keynesian and rational expectations theories concerning the success of stabilization policy?
QUESTION 7If consumers reduce the purchase of goods whose relative prices rise (substitution bias), the consumer price index (CPI) will tend to have an upward bias over time (overstates inflation).
a. True
b. False
Indicate whether the statement is true or false
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