ECO 202 CH 16 (part 2)- Fiscal Policy. Questions
And Answers 2023 Update. (A Grade)
productive capacity, rate of economic growth - Answer-fiscal policy
... [Show More] actions intended to
have long-run effects by expanding the ____ of the economy and increasing the ____
incentives to work, save, invest, start a business - Answer-Attempt to increase
aggregate supply by changing taxes to increase the ___, ___, ___, ___, and ___
tax wedge - Answer-the difference between pre-tax and post-tax return to an economic
activity
marginal tax rate - Answer-what is the tax wedge determined by?
labor supplied - Answer-reducing marginal taxes on individual income reduces the tax
wedge workers face, thereby increasing the quantity of ____ ____ (long run effects of
tax policy: individual income tax)
entrepreneurship, new business - Answer-many small businesses are ____ ____ whose
profits are taxed at the individual income tax rates. Cutting individual income tax rates
raises the return to ____, encouraging the opening of ____ ____ (long run effects of tax
policy: individual income tax)
increases, return to saving - Answer-most households are taxed on their returns from
saving at the individual income taxes rates. Reducing marginal income tax rates,
thereby _____ the ____ __ ____ (long run effects of tax policy: individual income tax)
increasing the return - Answer-Cutting the marginal corporate income tax would
encourage investment spending by ____ __ ____ corporations receive from new
investments in equipment, factories, and office buildings (long-run effects of tax policy:
corporate income tax)
innovations, technological change - Answer-Because _____ are often embodies in new
investment goods, cutting the corporate income tax potentially increase then pace of
____ ____ (long-run effects of tax policy: corporate income tax)
magnitude - Answer-the _____ of the supply-side effects is the subject of considerable
debate
laffer curve - Answer-the relationship between Tax Rates and Tax Revenues
$0 - Answer-what is the tax revenues when tax rate equals 0%?
$0 (we wouldn't work because we wouldn't get to keep any of the money) - Answer-Tax
Revenues when rate equals 100%?
Continues... [Show Less]