Question

In a progressive tax system, if a person moves from one income bracket to a higher income bracket

		both the marginal tax rate and average tax rate will be higher.
		both the marginal tax rate and average tax rate will be lower.
		the marginal tax rate will be lower and the average tax rate will be higher.
		the marginal tax rate will be higher and the average tax rate will be lower.

In working to correct a recession with fiscal policy, the government can

		They both target aggregate demand to overcome business fluctuations.
		They are both somewhat ineffective when the economy suffers real shocks.
		They both involve some amount of borrowing from the public.
		Each of these answers is correct.

		wait for wages and prices to become more flexible.
		increase the money supply.
		increase its expenditures and/or decrease taxes to raise the Solow growth curve.
		raise its expenditures and/or lower taxes to increase aggregate demand. In what way are monetary and fiscal policies similar?

In what way are monetary and fiscal policies similar?

		They both target aggregate demand to overcome business fluctuations.
		They are both somewhat ineffective when the economy suffers real shocks.
		They both involve some amount of borrowing from the public.
		Each of these answers is correct.

Answer 1

Solution-

1. In a progressive tax system, if a person moves from one income bracket to a higher income bracket both the marginal tax rate and average tax rate will be higher.

The correct option is A. both the marginal tax rate and average tax rate will be higher.

2. In working to correct a recession with fiscal policy, the government can raise its expenditures and/or lower taxes to increase aggregate demand.

The correct option is D. raise its expenditures and/or lower taxes to increase aggregate demand.

3. In what way are monetary and fiscal policies similar?

The correct option is A. They both target aggregate demand to overcome business fluctuations.