Author Question: Changes in the price level A) do not affect the level of aggregate supply in the long run. B) ... (Read 57 times)

storky111 · **on:** Jun 29, 2018

Changes in the price level

A) do not affect the level of aggregate supply in the long run.
B) increase the level of aggregate supply in the long run.
C) decrease the level of aggregate supply in the long run.
D) increase the level of aggregate supply in the long run only at very high levels of output.

Question 2

Last year, Anthony Millanti earned exactly 30,000 of taxable income. Assume that the income tax system used to determine Anthony's tax liability is progressive.

The table below lists the tax brackets and the marginal tax rates that apply to each bracket.

a. Draw a new table that lists the amounts of income tax that Anthony is obligated to pay for each tax bracket, and the total tax he owes the government. (Assume that there are no allowable tax deductions, tax credits, personal exemptions, or any other deductions that Anthony can use to reduce his tax liability).
b. Determine Anthony's average tax rate.

Tax Bracket Marginal Tax Rate
0-5,000 0.05 (5)
5,001-10,000 0.10 (10)
10,001-15,000 0.15 (15)
15,001-20,000 0.20 (20)
20,001-25,000 0.25 (25)
25,001-30,000 0.30 (30)

hollysheppard095 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

a.
Tax Bracket Marginal Tax Rate Tax Liability
0-5,000 0.05 (5) 250
5,001-10,000 0.10 (10) 500
10,001-15,000 0.15 (15) 750
15,001-20,000 0.20 (20) 1,000
20,001-25,000 0.25 (25) 1,250
25,001-30,000 0.30 (30) 1,500
Total 5,250

b. The average tax rate is equal to the total tax paid divided by total income:
5,250 / 30,000 = 0.175 (17.5 )