Suppose that the consumer price index has risen from 100 to 200. From this information we can conclude that
a) each person's real income was cut in half
b) consumer incomes are doubled
c) the prices in an average consumer's basket have doubled
d) all consumer good prices are doubled
e) all prices in the economy are doubled
Ans: c) the prices in an average consumer's basket have doubled
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According to the standard textbook Keynesian analysis, which is greater: the tax multiplier or the government spending multiplier? Explain the reasoning behind this relationship
The property tax may be regressive even though wealthy people own much more taxable property than do poor people. This possibility arises because:
A. marginal and average tax rates on property tend to converge. B. wealthy people can evade property taxes while poor people cannot. C. property taxes on rental property and business property are shifted. D. statutory property tax rates decline as the value of property rises.