Question 1

If there is a decrease in government purchases along with a decrease in the marginal tax rate on labour income, then:

Accepted Answer

A) the income effect would be toward a decrease in labour supply. 
B) the overall effect on labour supply is uncertain. 
C) the substitution effect would be towards an increase in labour supply. 
D) all of the above. 
A) the income effect would be toward a decrease in labour supply. 
B) the overall effect on labour supply is uncertain. 
C) the substitution effect would be towards an increase in labour supply. 
D) all of the above. D

Question 2

An increase in government purchases financed by an increase in the marginal tax rate on labour income, increases the quantity of labour supplied, if the:

Accepted Answer

A) negative substitution effect is bigger than the positive income effect. 
B) negative substitution effect is smaller than the positive income effect. 
C) positive substitution effect is bigger than the negative income effect. 
D) positive substitution effect is smaller than the negative income effect. 
A) negative substitution effect is bigger than the positive income effect. 
B) negative substitution effect is smaller than the positive income effect. 
C) positive substitution effect is bigger than the negative income effect. 
D) positive substitution effect is smaller than the negative income effect. B

Question 3

In the short run if the tax rate on asset income,   r , rises, then in the market clearing model:

Accepted Answer

A) household current consumption will rise compared to future consumption. 
B) current investment will fall. 
C) the after tax real interest rate falls. 
D) all of the above. 
A) household current consumption will rise compared to future consumption. 
B) current investment will fall. 
C) the after tax real interest rate falls. 
D) all of the above. D

Question 4

If the marginal tax rate on income,   w, changes but government purchases don't then the government could have:

Accepted Answer

A) raised some other lower marginal rate wage tax. 
B) used all the increased revenue due to the higher marginal tax rate for real transfers. 
C) reduced some income tax deductions. 
D) all of the above. 
A) raised some other lower marginal rate wage tax. 
B) used all the increased revenue due to the higher marginal tax rate for real transfers. 
C) reduced some income tax deductions. 
D) all of the above.

Question 5

A decrease in the marginal tax rate on asset income,   r, in the short run in the market clearing model:

Accepted Answer

A) does not change the stock of capital 
B) decreases real GDP. 
C) reduces the market clearing rental price of capital. 
D) all of the above. 
A) does not change the stock of capital 
B) decreases real GDP. 
C) reduces the market clearing rental price of capital. 
D) all of the above.

Question 6

The Eurozone government gains most revenue from:

Accepted Answer

A) property taxes. 
B) social contributions taxes. 
C) UN grants. 
D) all of the above. 
A) property taxes. 
B) social contributions taxes. 
C) UN grants. 
D) all of the above.

Question 7

If the real marginal tax rate,   w, increases in the market clearing model then:

Accepted Answer

A) the supply of labour decreases. 
B) the demand for capital decreases. 
C) real output, Y, declines. 
D) all of the above. 
A) the supply of labour decreases. 
B) the demand for capital decreases. 
C) real output, Y, declines. 
D) all of the above.

Question 8

The decreasing part of the Laffer curve supports the view of proponents of:

Accepted Answer

A) lower public spending 
B) unchanged public spending 
C) higher public spending 
D) none of the above. 
A) lower public spending 
B) unchanged public spending 
C) higher public spending 
D) none of the above.

Question 9

A decrease in the marginal tax on asset income, reduces investment short run and the capital stock and GDP in the long run.

Accepted Answer

A) True 
 B)False

Question 10

A graduate-rate tax structure is one:

Accepted Answer

A) whose marginal rate increases as income increases. 
B) that has a flat rate. 
C) whose average rate equals the marginal rate. 
D) whose marginal rate decreases as income increases. 
A) whose marginal rate increases as income increases. 
B) that has a flat rate. 
C) whose average rate equals the marginal rate. 
D) whose marginal rate decreases as income increases.

Question 11

In the long run an increase in the marginal tax rate on asset income,   r, in the market clearing model:

Accepted Answer

A) increases GDP. 
B) decrease the capital stock. 
C) raises consumption. 
D) all of the above. 
A) increases GDP. 
B) decrease the capital stock. 
C) raises consumption. 
D) all of the above.

Question 12

The decreasing part of the Laffer curve supports the view of proponents of:

Accepted Answer

A) lower tax rates 
B) unchanged tax rates. 
C) higher tax rates. 
D) none of the above. 
A) lower tax rates 
B) unchanged tax rates. 
C) higher tax rates. 
D) none of the above.

Question 13

The marginal income tax rate is:

Accepted Answer

A) taxes divided by income. 
B) the change in taxes when income changes one dollar. 
C) income divide by taxes. 
D) the change in income when taxes change one dollar. 
A) taxes divided by income. 
B) the change in taxes when income changes one dollar. 
C) income divide by taxes. 
D) the change in income when taxes change one dollar.

Question 14

If the marginal tax rate on income,   w, changes but government purchases don't then the government could have:

Accepted Answer

A) raised some other lower marginal rate wage tax. 
B) lowered real transfers. 
C) raised some income tax deductions. 
D) all of the above. 
A) raised some other lower marginal rate wage tax. 
B) lowered real transfers. 
C) raised some income tax deductions. 
D) all of the above.

Question 15

An increase in government purchases financed by an increase in the marginal tax rate on labour income, decreases the quantity of labour supplied, if the:

Accepted Answer

A) negative substitution effect is bigger than the positive income effect. 
B) negative substitution effect is smaller than the positive income effect. 
C) positive substitution effect is bigger than the negative income effect. 
D) positive substitution effect is smaller than the negative income effect. 
A) negative substitution effect is bigger than the positive income effect. 
B) negative substitution effect is smaller than the positive income effect. 
C) positive substitution effect is bigger than the negative income effect. 
D) positive substitution effect is smaller than the negative income effect.

Question 16

If there is a decrease in government purchases along with a decrease in the marginal tax rate on labour income, then:

Accepted Answer

A) the income effect would be toward a decrease in labour supply. 
B) the overall effect on labour supply is negative. 
C) the substitution effect would be towards a decrease in labour supply. 
D) all of the above. 
A) the income effect would be toward a decrease in labour supply. 
B) the overall effect on labour supply is negative. 
C) the substitution effect would be towards a decrease in labour supply. 
D) all of the above.

Question 17

The after tax real wage is:

Accepted Answer

A) (w/P)•   w 
B) (w/P)•L•(1 -   w) 
C) (w/P)•(1 -   w) 
D) (w/P)/(1 -   w) 
A) (w/P)•   w 
B) (w/P)•L•(1 -   w) 
C) (w/P)•(1 -   w) 
D) (w/P)/(1 -   w)

Question 18

In the long run an increase in the marginal tax rate on asset income,   r, in the market clearing model:

Accepted Answer

A) decreases GDP. 
B) decrease the capital stock. 
C) lowers consumption. 
D) all of the above. 
A) decreases GDP. 
B) decrease the capital stock. 
C) lowers consumption. 
D) all of the above.

Question 19

One less the marginal tax on wages, (1 -   w) is:

Accepted Answer

A) the fraction of wage income paid in taxes. 
B) the fraction of wage income the worker gets to keep. 
C) the fraction of income the government receives. 
D) the average marginal tax rate. 
A) the fraction of wage income paid in taxes. 
B) the fraction of wage income the worker gets to keep. 
C) the fraction of income the government receives. 
D) the average marginal tax rate.

Question 20

If the marginal tax on labour income,   w, rises then the tax receipts of the government:

Accepted Answer

A) rise. 
B) fall. 
C) stay the say. 
D) may rise, fall or stay the same. 
A) rise. 
B) fall. 
C) stay the say. 
D) may rise, fall or stay the same.

If there is a decrease in government purchases along with a decrease in the marginal tax rate on labour income, then:

An increase in government purchases financed by an increase in the marginal tax rate on labour income, increases the quantity of labour supplied, if the:

In the short run if the tax rate on asset income, _r, rises, then in the market clearing model:

If the marginal tax rate on income, _w, changes but government purchases don't then the government could have:

A decrease in the marginal tax rate on asset income, _r, in the short run in the market clearing model:

The Eurozone government gains most revenue from:

If the real marginal tax rate, _w, increases in the market clearing model then:

The decreasing part of the Laffer curve supports the view of proponents of:

A decrease in the marginal tax on asset income, reduces investment short run and the capital stock and GDP in the long run.

A graduate-rate tax structure is one:

In the long run an increase in the marginal tax rate on asset income, _r, in the market clearing model:

The decreasing part of the Laffer curve supports the view of proponents of:

The marginal income tax rate is:

If the marginal tax rate on income, _w, changes but government purchases don't then the government could have:

An increase in government purchases financed by an increase in the marginal tax rate on labour income, decreases the quantity of labour supplied, if the:

If there is a decrease in government purchases along with a decrease in the marginal tax rate on labour income, then:

The after tax real wage is:

In the long run an increase in the marginal tax rate on asset income, _r, in the market clearing model:

One less the marginal tax on wages, (1 - _w) is:

If the marginal tax on labour income, _w, rises then the tax receipts of the government:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters

Exam 14: Taxes

If there is a decrease in government purchases along with a decrease in the marginal tax rate on labour income, then:

An increase in government purchases financed by an increase in the marginal tax rate on labour income, increases the quantity of labour supplied, if the:

In the short run if the tax rate on asset income, r , rises, then in the market clearing model:

If the marginal tax rate on income, w, changes but government purchases don't then the government could have:

A decrease in the marginal tax rate on asset income, r, in the short run in the market clearing model:

The Eurozone government gains most revenue from:

If the real marginal tax rate, w, increases in the market clearing model then:

The decreasing part of the Laffer curve supports the view of proponents of:

A decrease in the marginal tax on asset income, reduces investment short run and the capital stock and GDP in the long run.

A graduate-rate tax structure is one:

In the long run an increase in the marginal tax rate on asset income, r, in the market clearing model:

The decreasing part of the Laffer curve supports the view of proponents of:

The marginal income tax rate is:

If the marginal tax rate on income, w, changes but government purchases don't then the government could have:

An increase in government purchases financed by an increase in the marginal tax rate on labour income, decreases the quantity of labour supplied, if the:

If there is a decrease in government purchases along with a decrease in the marginal tax rate on labour income, then:

The after tax real wage is:

In the long run an increase in the marginal tax rate on asset income, r, in the market clearing model:

One less the marginal tax on wages, (1 - w) is:

If the marginal tax on labour income, w, rises then the tax receipts of the government:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters

In the short run if the tax rate on asset income, _r, rises, then in the market clearing model:

If the marginal tax rate on income, _w, changes but government purchases don't then the government could have:

A decrease in the marginal tax rate on asset income, _r, in the short run in the market clearing model:

If the real marginal tax rate, _w, increases in the market clearing model then:

In the long run an increase in the marginal tax rate on asset income, _r, in the market clearing model:

If the marginal tax rate on income, _w, changes but government purchases don't then the government could have:

In the long run an increase in the marginal tax rate on asset income, _r, in the market clearing model:

One less the marginal tax on wages, (1 - _w) is:

If the marginal tax on labour income, _w, rises then the tax receipts of the government: