Suppose one goal of the tax system was to achieve vertical equity. While people may disagree about what is "equitable," based on the marginal tax rates given for the two years, which of the following statements is true?
a. Vertical equity is possible in both years.
b. Vertical equity is possible in 2009 but not in 2010.
c. Vertical equity is not possible in 2009 but is possible in 2010.
d. Vertical equity is not possible in either year.
Ans: b. Vertical equity is possible in 2009 but not in 2010.
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Refer to Figure 27-1. Suppose the economy is in short-run equilibrium above potential GDP and wages and prices are rising
If contractionary policy is used to move the economy back to long run equilibrium, this would be depicted as a movement from ________ using the static AD-AS model in the figure above. A) B to A B) A to E C) C to B D) E to A E) D to C
A Keynesian econometric model is likely to emphasize that monetary policy affects economic activity through changes in
A) the money supply. B) reserve requirements. C) interest rates. D) currency holding by the public.