Many believe that fairness calls for higher income taxes on the wealthy. Using one of the “Ideas for Beyond the Final Exam,” explain how higher taxes on the wealthy will affect output.
What will be an ideal response?
Greater equality comes at the expense of reduced output. The reversal of Ronald Reagan’s tax cuts will diminish the incentive of the wealthy to earn taxable income. They will work fewer hours or less hard, or they will accept nonwage benefits such as country club memberships, find more tax loopholes, or even seek illegal channels to reduce their tax liability.
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In monopolistic competition, each firm's marginal revenue curve has a ________ and its demand curve has a ________
A) slope equal to zero; slope equal to zero B) slope equal to zero; negative slope C) negative slope; a slope equal to zero D) negative slope; negative slope
An increase in the money supply will affect aggregate demand
A) only if the increase in the money supply causes interest rates to rise. B) only if the increase in the money supply causes people to buy less goods and services. C) only if the increase in the money supply causes people to increase their saving. D) if the increase in the money supply causes interest rates to fall and/or causes people to buy more goods and services.