Question Details

The calculations governments make about tax revenues 



1. "Inevitably, says Laffer, this economic growth will raise enough tax revenues to more than offset the original tax cut, thus shrinking the federal deficit and reducing inflation." Where on the Laffer curve must Laffer believe the economy is located? 
a) at the peak of the curve b) to the left of the peak of the curve 
c) to the right of the peak of the curve d) not enough information to tell 
2. "The European Union's jobless rate, by contrast, is nudging 12 percent. A few die-hard Keynesians might reckon that this leaves room for a demand stimulus to create jobs, but most economists believe that ........" Complete this clipping. 
a) lower tax rates are needed b) the explanation is Europeans' laziness 
c) the explanation is a high natural rate of unemployment 
d) the explanation is large numbers of discouraged workers 
3. "Indeed, there was a remarkable consensus among economists at the conference that most of the rise in unemployment over the past two decades does not reflect deficient demand, but rather a rise in ......... Complete this sentence. 
a) the tax rate b) discouraged workers 
c) government spending d) the natural rate of unemployment 
4. "The calculations governments make about tax revenues are always based on the assumption that taxpayers are dutiful sheep who will raise not a bleat as they are led to the fleecing pen. They will all continue to stay where they are, work just as hard, produce just as much and pay their taxes on the same basis as they always have. If this assumption is false, then the government's estimate of the extra tax revenue that a tax increase will generate will be 
a) an overestimate b) an underestimate c) an accurate estimate d) an erratic estimate 
5. "At a pragmatic level, my colleagues take the view that if a rich man paying a lower tax rate makes it possible for a low-income family to have a good house to live in, useful 32 
and secure employment, access to quality, affordable medical care, and a good education for their children - then society as a whole is richer." This refers to the trade-off between 
a) equity and efficiency b) consumption and saving 
c) inflation and unemployment d) taxes and government spending



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