Discretionary fiscal policy to stimulate the economy includes ________
A. lowering the tax rate paid by households with middle incomes
B. raising the tax on gasoline
C. the fall in tax revenue as the economy goes into recession
D. the rise in tax revenue collected from businesses as their profits in-crease
A Answer A is discretionary fiscal policy because it requires an act of Congress. It is an expansionary policy because it is de-signed to increase consumption expenditure and hence ag-gregate demand.
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The figure above shows the market for tires. The government has imposed a tax on tires, and the buyers pay ________ of the tax
A) $10 B) $20 C) $50 D) $60 E) $30
In 1985, Alice paid $20,000 for an option to purchase ten acres of land. By paying the $20,000, she bought the right to buy the land for $100,000 in 1992. When she acquired the option in 1985, the land was worth $120,000
In 1992, it is worth $110,000. Should Alice exercise the option and pay $100,000 for the land? A) Yes. B) No. C) It depends on what the rate of inflation was between 1985 and 1992. D) It depends on what the rate of interest was.