Figure 18-1

According to the graph in Figure 18-1, the tax is which of the following?

If the Fed raises the federal funds rate,

A) investment increases. B) real GDP increases. C) exports increase and imports decrease. D) exports decrease and imports increase. E) in the short run the interest rate falls.

The Earned Income Tax Credit avoids the poverty trap by doing which of the following?

a. Lowering benefits by 21.06 cents for every dollar earned above $17,530 b. Insisting people work in order to claim the benefit c. Allowing workers to keep their benefits no matter how high their income increased d. Increasing benefits by 21.06 cents for every dollar earned above $17,530