Question 1

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

Accepted Answer

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

Question 2

What are the long run effects of an increase in the marginal tax rate on asset income in the market clearing model?

Accepted Answer

The short run decline in capit

Question 3

With an increase in government purchases financed by an increase in the marginal tax rate on labour income, the change in labour supply depends on whether the:

Accepted Answer

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

Question 4

A flat-rate tax structure is one:

Accepted Answer

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

Question 5

The increasing 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 6

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

Accepted Answer

A) lowered some other lower marginal rate wage tax like the social security payroll tax. 
B) reduced real transfers. 
C) reduced some income tax deductions. 
D) all of the above. 
A) lowered some other lower marginal rate wage tax like the social security payroll tax. 
B) reduced real transfers. 
C) reduced some income tax deductions. 
D) all of the above.

Question 7

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

Accepted Answer

A) increases the stock of capital and real GDP. 
B) increases the stock of capital and decreases real GDP. 
C) decreases the stock of capital and real GDP. 
D) decreases the stock of capital and increases real GDP. 
A) increases the stock of capital and real GDP. 
B) increases the stock of capital and decreases real GDP. 
C) decreases the stock of capital and real GDP. 
D) decreases the stock of capital and increases real GDP.

Question 8

The term (1 -   w) is the faction of labour income the worker gets to keep.

Accepted Answer

A) True 
 B)False

Question 9

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) increase the capital stock. 
C) raises consumption. 
D) all of the above. 
A) decreases GDP. 
B) increase the capital stock. 
C) raises consumption. 
D) all of the above.

Question 10

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

Question 11

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

Accepted Answer

A) raises change the stock of capital 
B) increases real GDP. 
C) increases gross investment. 
D) all of the above. 
A) raises change the stock of capital 
B) increases real GDP. 
C) increases gross investment. 
D) all of the above.

Question 12

If government purchases are constant, then an increase in the marginal income tax rate,   w, leads to:

Accepted Answer

A) a positive income effect. 
B) a negative income effect. 
C) no income effect. 
D) a marginal income effect. 
A) a positive income effect. 
B) a negative income effect. 
C) no income effect. 
D) a marginal income effect.

Question 13

An increase in the marginal tax on labour income, increases the supply of labour.

Accepted Answer

A) True 
 B)False

Question 14

What are the effects of an increase in the marginal tax rate on labour income in the market clearing model?

Accepted Answer

An increase in the marginal ta

Question 15

The after tax real interest rate is:

Accepted Answer

A) r/   r 
B) (1+   r)/(1+r) 
C) (1-   r)•r 
D)    r/r 
A) r/   r 
B) (1+   r)/(1+r) 
C) (1-   r)•r 
D)    r/r

Question 16

The marginal tax rate is the change in taxes when taxable income changes one unit.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

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

Accepted Answer

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

Question 19

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

Accepted Answer

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

Question 20

What does (1 -   w) tell us and what are the real after tax returns on assets and labour if income from them are taxed?

Accepted Answer

The term (1 - @#IMG-DLM& _w) tells us the

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

What are the long run effects of an increase in the marginal tax rate on asset income in the market clearing model?

With an increase in government purchases financed by an increase in the marginal tax rate on labour income, the change in labour supply depends on whether the:

A flat-rate tax structure is one:

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

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:

The term (1 - _w) is the faction of labour income the worker gets to keep.

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

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

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

If government purchases are constant, then an increase in the marginal income tax rate, _w, leads to:

An increase in the marginal tax on labour income, increases the supply of labour.

What are the effects of an increase in the marginal tax rate on labour income in the market clearing model?

The after tax real interest rate is:

The marginal tax rate is the change in taxes when taxable income changes one unit.

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

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:

What does (1 - _w) tell us and what are the real after tax returns on assets and labour if income from them are taxed?

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

What are the long run effects of an increase in the marginal tax rate on asset income in the market clearing model?

With an increase in government purchases financed by an increase in the marginal tax rate on labour income, the change in labour supply depends on whether the:

A flat-rate tax structure is one:

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

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:

The term (1 - w) is the faction of labour income the worker gets to keep.

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

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

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

If government purchases are constant, then an increase in the marginal income tax rate, w, leads to:

An increase in the marginal tax on labour income, increases the supply of labour.

What are the effects of an increase in the marginal tax rate on labour income in the market clearing model?

The after tax real interest rate is:

The marginal tax rate is the change in taxes when taxable income changes one unit.

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

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:

What does (1 - w) tell us and what are the real after tax returns on assets and labour if income from them are taxed?

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

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

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:

The term (1 - _w) is the faction of labour income the worker gets to keep.

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

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

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

If government purchases are constant, then an increase in the marginal income tax rate, _w, leads to:

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

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:

What does (1 - _w) tell us and what are the real after tax returns on assets and labour if income from them are taxed?