Explain why a change in income tax rates causes the consumption schedule to change slope
An income tax rate determines the portion of an increase in income that is taken in taxes. If the rate increases, then for any increase in income, disposable income increases by a smaller amount. When a portion of the increase in disposable income is consumed, the consumption spending is less than it would be if the income tax rate was lower. The smaller increase in consumption for a given increase in income means that the numerical value of the MPC is smaller, and the slope of the consumption schedule is flatter. Conversely, if the income tax rate decreases, then for any increase in income, disposable income increases by a larger amount. The larger increase in consumption for a change in income means that the numerical value of the MPC is larger and the consumption schedule is steeper.
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How can economists be confident that the pill itself is responsible for the increases in female labor force participation?
A. States that legalized the pill earlier also had earlier increases in female labor force participation. B. Starting from 1960, the year the pill was approved for sale, female labor force participation has been rising. C. States that legalized different versions of the pill had different patterns of female labor force participation. D. It seems to be common sense that delaying childbearing would increase labor force participation.
Which of the following is a reason for the slow economic growth in former colonial nations?
a. Inadequate foreign aid b. A communist system of government c. Lack of skilled officials d. Religious extremism e. High entrepreneurial skills