1) (justify) The less progressive the tax system, the: - a) Weaker is the built-in stability...

1) (justify) The less progressive the tax system, the: -

a) Weaker is the built-in stability for the economy

b) Greater is the built-in stability for the economy

c) Less is the effect of crowding-out on the economy

d) Greater is the severity of business fluctuations on the economy

2) (show working) If the price level is constant and the slope of the aggregate expenditure curve is 0.65, a decrease in investment of RM 100 leads to a decrease in real GDP of about -

a) RM65

b) RM154

c) RM100

d) RM286

3) [SHOW WORKING] If the price level is constant and the slope of the aggregate expenditure curve is 0.65, a decrease in investment of RM 100 leads to a decrease in real GDP of about -

a) RM65

b) RM154

c) RM100

d) RM286

Expert Solution

1) correct option - (a)

Progressive taxation is an automatic stabilizer. Less progressive the taxation is weaker the built in stability will be of economy.

2) correct option - (d)

We use the formula of keynesian multiplier.

Slope of aggregate expenditure = MPC

Solutions are in below pic.

Rahul Sunny answered 2 years ago

What is a progressive income tax system and how can an income tax system be structured...

What is a progressive income tax system and how can an income tax system be structured so that it is progressive?

Distinguish between a progressive tax system and a regressive tax system. Consider two categories of people—the...

Distinguish between a progressive tax system and a regressive tax system. Consider two categories of people—the rich and the poor. Who—the rich or the poor—pay more tax under a progressive tax system? Who pay more tax under a regressive tax system? Who pay a higher percentage of their taxable income under a progressive tax system? And who pay a higher percentage of their taxable income under a regressive tax system?

Many tax reform proposals suggest moving to a flat tax system, one that eliminates progressive tax...

Many tax reform proposals suggest moving to a flat tax system, one that eliminates progressive tax brackets. One proposal would be that everyone pays (say) 25% of their income. Keeping the rest of the tax code intact, how would this change the market for luxury vs. lower priced homes?

Suppose a country has a progressive income tax system that uses the tax table below. Taxable...

Suppose a country has a progressive income tax system that uses the tax table below. Taxable Income From To % Tax 0 50,000 10% 50,001 100,000 20% 101,000 200,000 30% Over 200,000 40% Assume Joe earns $200,000 of taxable income. How much income tax does he pay? Group of answer choices A.80,000 B.45,000 C.60,000 D.25,000

If the marginal tax rate is less than the average tax rate, the tax system is?...

If the marginal tax rate is less than the average tax rate, the tax system is? a. proportional b. flat c. regressive d. progressive

Which is necessarily true if the government were to replace a progressive income tax system with...

Which is necessarily true if the government were to replace a progressive income tax system with a proportional one? 1) Lower income groups would pay less tax 2) Higher income groups would pay more tax 3) All tax burdens would be exactly the same 4) The distribution of after-tax income would become less equal The Federal payroll (Social Security) tax: 1) Increases the progressivity of the Federal tax system 2) Reduces some of the progressivity of the Federal tax system...

The estate tax in the United States is a progressive tax on the estate of a...

The estate tax in the United States is a progressive tax on the estate of a deceased person before their property (real estate, stocks and bonds, business interests, etc.) is transferred to their heirs. In 1906, President Theodore Roosevelt proposed a federal estate tax, saying, "The man of great wealth owes a particular obligation to the State because he derives special advantages from the mere existence of government." The estate tax was passed in the Emergency Revenue Act of 1916...

The tax system functions as a built-in-stabilizer. Explain Make sure to provide your answer with the...

The tax system functions as a built-in-stabilizer. Explain Make sure to provide your answer with the relevant economic, mathematical and graphical presentations.

What is the difference between a progressive tax, a proportional tax, and a regressive tax? Give...

What is the difference between a progressive tax, a proportional tax, and a regressive tax? Give an example of each type of tax

Part (d) Is a tax on cigarettes a regressive tax or a progressive tax? Explain your...

Part (d) Is a tax on cigarettes a regressive tax or a progressive tax? Explain your answer, including a definition of both terms. Part (e) Australia’s police forces and border forces have warned that rapid rises in the tax on cigarettes have had unintended consequences of encouraging illegal activity such as smuggling, with proceeds funding other criminal activities. Explain why this might be the case. In your answer refer to the role that elasticity of demand plays in making illegal...

Question

1) (justify) The less progressive the tax system, the: - a) Weaker is the built-in stability...

Solutions

Expert Solution

Related Solutions