Author Question: If your income and the price level both rise by 5 percent, and you think you now have more real ... (Read 93 times)

MirandaLo · **on:** Jun 29, 2018

If your income and the price level both rise by 5 percent, and you think you now have more real income, you are suffering from

A) diminishing marginal expectations.
B) leakages.
C) injections.
D) money illusion.

Question 2

According to dynamic tax analysis, will continuing to push up the tax lead to steady increases in tax revenues? Why?

What will be an ideal response?

tanna.moeller · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

D

Answer to Question 2

In dynamic tax analysis, the tax base will eventually decline for ever-higher tax rates. This means that tax revenues will eventually fall at sufficiently high tax rates.