To make a tax system more progressive, policy makers could
A. Raise marginal tax rates for higher incomes.
B. Narrow the tax base.
C. Raise sales taxes on commonly purchased items.
D. Allow all interest expenses to be deductible, not just interest on mortgages.
Answer: A
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Exhibit 3-3 Demand curves
Which of the graphs in Exhibit 3-3 depicts the effect of an increase in income on the demand for pork and beans (an inferior good)?
A. Graph A. B. Graph B. C. Graph C. D. Graph D.
If there is a shortage in a free market, then
A) consumers will offer to pay a lower price for the good, and the price will fall toward the equilibrium level. B) consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level. C) suppliers will decrease their output to match demand. D) suppliers will accept any price below equilibrium.