Related to the Economics in Practice on P

question 140

Multiple Choice

Related to the Economics in Practice on p. 102: Researchers found that after a few years of a tax relief policy for foreigners, the fraction of foreigners in the top 0.5 percent of income earners in Denmark almost doubled. The researchers concluded that for this group of workers, labor supply seems to be

• A) elastic.
• B) inelastic.
• C) unit elastic.
• D) perfectly inelastic

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Definitions:

Government Spending

refers to the total expenditure by a government on goods, services, and public projects, including salaries, infrastructure, and welfare programs.

Depression

A major and lasting slump in economic performance, highlighted by a notable reduction in GDP, increased unemployment rates, and persistent deflation.

Rate of Inflation

The percentage increase in the price level of goods and services over a period, typically one year.

Federal Budget Deficits

The difference between what a government spends and what it collects in taxes over a fiscal year, with deficits indicating more spending than revenue.