Exam 11: Fiscal Policy and the Federal Budget

Tax revenues equal the (average) tax rate multiplied by the tax base.

At a taxable income of $50,000 Mari's income tax is $10,500. When her taxable income rises to $55,000 her income tax is $11,750. Based on this information, what is Mari's marginal tax rate?

A curve showing the relationship between tax rates and tax revenues is called a __________ curve.

Income tax revenues rise as income tax rates fall. It follows that the

Fiscal policy is implemented primarily by

If there is complete crowding out, the change in Real GDP that results from a given change in autonomous spending will be

As a result of crowding out, demand-side fiscal policy may be ineffective at achieving certain macroeconomic goals.

Which of the following is an example of crowding out?

Fiscal policy refers to

A "flat tax" is another term for __________ tax.

With a progressive income tax, as taxable income rises (up to a certain point), one's tax rate rises.

The transmission lag is the time between

A permanent marginal tax decrease is likely to

Exhibit 11-1 -Refer to Exhibit 11-1. The economy is currently at point 1. In this situation, Keynesian economists would most likely propose

Suppose Congress increases income taxes. This is an example of

The economy is in a recessionary gap, there is incomplete crowding out, and government implements expansionary fiscal policy. It follows that

Some economists believe that permanently lower marginal income tax rates __________ the incentive to work and thus shift the __________.

Taxable income rises by $2,500 and taxes rise by $825. What is the marginal tax rate?

Suppose that in a certain nation the flat income tax rate of 30 percent rises to 35 percent and as a result the tax base falls from $400 billion to $375 billion. As a result, tax revenues __________, indicating the nation is on the __________ portion of its Laffer curve.

Which of the following is not an example of crowding out?