Capital gains are taxed at a different rate than income and this reduces revenues the government receives. All else equal, what would happen if capital gains taxes were eliminated?
A) They would have to be replaced by a consumption tax.
B) The government would not be able to spend money on any programs.
C) Everyone would have to pay less in taxes.
D) The deficit would increase because of lack of revenues.
D
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A monopolistic competitive firm is inefficient because the firm:
a. is not maximizing its profit. b. is producing at an output where average total cost is not minimum. c. earns positive economic profit in the long run. d. none of these.
Which of the following is an example of a transfer payment?
a. wages and salaries paid to the employees of the Internal Revenue Service b. purchase of automobiles by a local police department c. agriculture subsidies paid to farmers d. salaries paid to the college professors of state-operated universities