The progressive income tax is a money transfer system—from the taxpayer to government—and it is in the nature of this system that during recessions, less is taken from people than is taken in periods of prosperity. It is in this sense that the progressive income tax system is regarded by economists as
a. an unfair intervention in people's lives
b. a countercyclical discretionary force
c. a system that is unrelated to government spending
d. an automatic stabilizer
e. volatile and capricious
D
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Given a desired reserve ratio of 20 percent, a commercial bank that has received a new deposit of $100 can make additional loans of
A) $0. B) $20. C) $80. D) $120.
Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not. Why is this so?
A) because unlike Microsoft, the wealthy corn farmer is probably a monopolist B) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects C) because Microsoft could potentially lose sales if it sets prices indiscriminately D) because Microsoft is large enough to hire the best people in the field