The supporters of a proposal to increase marginal taxes on those ...

[jake]

The supporters of a proposal to increase marginal taxes on those earning over 200,000 a year say this change would generate 100 billion in new tax revenues. A supply-side economist would argue that the actual revenue raised will be
 
  A) exactly 100 billion because there are no offsetting factors to a tax increase.
  B) more than 100 billion, because lower income people will work harder when they perceive the tax system to be fairer.
  C) more than 100 billion because interest rates will also be affected.
  D) less than 100 billion because some people will respond by working less.

Question 2

The rate of return that households expect on their savings is determined by:
 
  A) exchange rates. B) interest rates.
  C) government expenditure. D) tax rates.

[Alyson.hiatt@yahoo.com]

Answer to Question 1

D

Answer to Question 2

B