1. When interest income is taxed and the inflation rate rises, the tax revenue collected by the government

A. doesn't change.

B. increases.

C. decreases.

D. could either increase or decrease

2.

Full Employment Real GDP Tax revenues minus government expenditures $0 06 07 08 09 10 06 07 08 09 10 Year Year\fTable 1:01 Corporate profits $200 Net interest 150 Indirect taxes less subsidies 230 Depreciation 250 Compensation of employees 1,350 Proprietor's income 150 Rental income 70 Personal consumption expenditures 1,400 Government expenditure on goods and services 500 Net exports of goods and services 40