Questions from General Economics

Q: Analyze the positive versus normative arguments in the following case. What

Analyze the positive versus normative arguments in the following case. What statements of positive economics are used to support requiring air bags? What normative reasoning is used?

Q: Why does a reduction in taxes have a smaller multiplier effect than

Why does a reduction in taxes have a smaller multiplier effect than an increase in government spending of an equal amount?

Q: Consider an economy that is operating at the full employment level of

Consider an economy that is operating at the full employment level of real GDP. Assuming the MPC is 0.90, predict the effect on the economy of a $50 billion increase in government spending balanced by...

Q: What is the difference between discretionary fiscal policy and automatic stabilizers?

What is the difference between discretionary fiscal policy and automatic stabilizers? How are federal budget surpluses and deficits affected by the business cycle?

Q: Calculate the average and marginal tax rates in the following table,

Calculate the average and marginal tax rates in the following table, and indicate whether the tax is progressive, proportional, or regressive. What observation can you make concerning the relationship...

Q: What are the four largest categories of expenditures of the federal government

What are the four largest categories of expenditures of the federal government?

Q: Which of the following taxes satisfy the benefits received principle, and

Which of the following taxes satisfy the benefits received principle, and which satisfy the ability to pay principle? a. Gasoline tax b. Federal income tax c. Tax on Social Security benefits

Q: Explain why a 5 percent sales tax on gasoline is regressive.

Explain why a 5 percent sales tax on gasoline is regressive.

Q: Explain why each of the following taxes is progressive or regressive.

Explain why each of the following taxes is progressive or regressive. a. A $1 per pack federal excise tax on cigarettes. b. The federal individual income tax. c. The federal payroll tax.

Q: Consider this statement: “Our grandchildren may not suffer the entire

Consider this statement: “Our grandchildren may not suffer the entire burden of a federal deficit.” Do you agree or disagree? Explain.