In: Economics
10. B. specialization
Both countries benefits from trade due to specialization in the production of a good by each country.
11. C. progressive tax
It implies that the rate of tax increases with an increase in income. Suppose, a man has an income of $ 5000 per year, and he has to pay 10% tax. If his income increases to $ 10,000, the rate of tax may be 15%. Similarly, the rate of income tax may be 20% if the income rises upto $ 20,000. Progressive taxes are equitable. Their real burden is more on the rich and less on the poor.
12. A. an expansionary fiscal policy; an increase in government spending
Expansionary fiscal policy is related to increase in government spending or reduction in taxes in order to increase AD. It shifts AD curve rightwards.
13. B. Discretionary fiscal policies
Fiscal policy is the policy related to government spending and taxation. AD decreases when there is either decrease in government spending or increase in taxation.