Is the difference in the increase in money taken from the rich and the reduction in money taken from the poor a good measure of the redistributive impact of a progressive income tax system? Why or why not?
What will be an ideal response?
No, it is not a good measure of the redistributive impact of a progressive tax system because it overstates the amount of redistribution. This is because a progressive tax system will increase the pre-tax wages of high income workers and reduce the pre-tax wages of low-income workers. The result will be a lowering of the redistributive impact of progressive taxation.
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The real business cycle school of thought is generally viewed as controversial because
A) it blames unemployment on immigration. B) it contradicts classical economic thought. C) critics find it difficult to understand how many of the post-World War II recessions could be explained by adverse changes in technology. D) all of the above.
Which of the following will raise the expected marginal product of capital?
A) a reduction in the interest rate B) increased business optimism C) an investment tax credit D) a reduction in the corporate profits tax