How do high marginal tax rates influence the growth and prosperity of countries? What type of tax policy is needed to foster economic efficiency and growth?
Economic theory suggests that marginal tax rates can have important effects on incentives, and studies of international tax structures confirm this. Countries with high marginal tax rates tend to have low or negative rates of economic growth. Also, laws that tax capital investment heavily tend to stifle economic growth. Countries that experience rapid economic growth tend to have low marginal tax rates.
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A downward-sloping demand curve suggests that consumers
A) buy less at lower prices. B) buy more at higher prices. C) plan to buy more at a given, lower price. D) ignore marginal benefits and only focus on the supply of a product.
When a grocery store accepts your $5 bill in exchange for bread and milk, the $5 bill serves as a
A) unit of account. B) standard of deferred payment. C) store of value. D) medium of exchange.