Income tax collections:
A. fall during periods of prosperity, thus increase federal budget deficits.
B. rise during periods of prosperity, thus reduce federal budget deficits.
C. fall during recessions, thus increase the problem of unemployment.
D. rise during recessions, thus increase the problem of unemployment.
Answer: B
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If disposable income is $400 billion, autonomous consumption is $60 billion, and MPC is 0.8, what is the level of saving?
a. $20 billion. b. $210 billion. c. $380 billion. d. $590 billion. e. $780 billion.
What is a major criticism of corrective taxes?
a. They are done for political reasons rather than reducing externalities. b. They place most of the burden on the worst offenders. c. They unfairly burden the wealthy to pay for the actions of others. d. They disproportionally impact low-income people.