Scenario 10

question 115

Multiple Choice

Scenario 10.1 Imagine an economy that does not have international trade and is originally in equilibrium.Then the government increases the level of spending by $350 million because it received a gift from abroad.In this economy, only 65 cents of every dollar is spent, and the rest is saved.
Refer to Scenario 10.1.Calculate the value of the spending multiplier.

• A)2.86
• B)0.286
• C)1.54
• D)0.154
• E)0.35

Analyze the impact of different tax systems on individual and government revenue.

Distinguish between progressive, regressive, and proportional tax systems.

Describe vertical and horizontal equity in tax systems.

Recognize the principles guiding tax policy, including the ability-to-pay principle and benefits principle.