Fiscal Policy: Taxes Answers

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33

Based on what you have read, what type of tax is Robert paying?

A
a tariff
B
a sales tax
C
an excise tax
D
a corporate tax
34

What action can the government of Country DF take to encourage citizens to purchase homes?

A
maintain corporate tax rates
B
raise income taxes
C
raise property tax rates
D
lower income taxes for homeowners
35

What are the most likely effects of this policy? Check all that apply.

A
Businesses will likely pay workers less.
B
Businesses will likely hire more workers.
C
Businesses will likely earn higher profits.
D
Businesses will likely invest less in the economy.
E
Businesses will likely invest more in the economy.
36

How can expansionary and contractionary tax policies be used to manage the economy?Be sure to give your answer in two to three sentences.

Answer:

Expansionary tax policy lowers taxes, giving consumers and businesses more money to spend and helping stimulate the economy and reduce unemployment. Contractionary tax policy raises taxes to reduce spending and slow economic growth when the economy is growing too quickly, helping combat inflation.

37

What details did you discuss in your response? Check all that apply.

A
the difference between expansionary policy and contractionary policy
B
expansionary policies are used to stimulate the economy and reduce unemployment
C
contractionary polices are used to reduce economic growth and combat inflation

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