module 7

Which of the following is true of taxes? a.Taxes drive a wedge between what buyers pay and what sellers receive. b.Taxes increase the volume of mutually advantageous exchanges. c.Increases in taxes are the primary cause of inflation. d.Business taxes generate government revenue without imposing a burden on consumers and households.

Taxes drive a wedge between what buyers pay and what sellers receive.

How do high tariffs and other restraints on international trade affect a nation's prosperity?

They prevent the nation from fully realizing the potential gains from specialization, exchange, and competition.

Why do nations often impose trade barriers that make it difficult for their own citizens to trade with people in another country?

Trade restrictions often provide benefits to highly visible special interest groups while imposing a less visible cost on the general populace.

The Smoot-Hawley trade bill of 1930, designed to save jobs and increase revenue for the federal government, resulted in

a sharp reduction in trade and a decline in federal revenues from tariffs.

A country's level of economic freedom is influenced by a.the relative size of government expenditures, taxes and enterprises. b.the even-handedness of the court system and security of property rights. c.freedom to trade internationally d.all of the above.

all of the above

An increase in income tax rates will

make it less expensive for a successful lawyer to attend a tax deductible professional meeting in Hawaii.

Politicians will often be able to gain from support of trade restrictions because

organized interest groups benefiting from the restrictions will make large contributions to political campaigns while most others will not feel strongly about the restrictions.

In order to achieve a high economic freedom rating, a country must

protect property rights, enforce contracts even-handedly, and rely extensively on markets to allocate goods and services.

An increase in marginal tax rates will

reduce the share of additional earnings that individuals are permitted to keep

Are jobs the key to economic progress and the achievement of high income levels?

No, the people must be employed in jobs where they are producing goods and services that are valued highly relative to cost.