1.Suppose that a country has a progressive income tax code and taxable income is calculated in nominal terms, but the schedule of income tax rates is NOT indexed to inflation. An individual whose income keeps up with inflation over time will pay:

Select one:

a.the same percentage of income in taxes over time.

b.a lower percentage of income in taxes over time.

c.a lower rate of the alternative minimum tax.

d.a higher percentage of income in taxes over time.

2.lanned investment spending is _____ related to the interest rate because a _____ in the market interest rate _____.

Select one:

a.positively; fall; decreases the supply of loanable funds

b.positively; fall; decreases the opportunity cost of investing

c.negatively; rise; causes consumption to crowd out investment

d.negatively; rise; makes any given investment project less profitable

3.The convergence hypothesis is:

Select one:

a.not wrong, but education, infrastructure, and the rule of law are not equal among nations.

b.wrong because the income of poorer nations seems to get worse over time and the income of richer nations gets better.

c.not wrong, but because poorer nations are involved in so many destabilizing incidents like wars, disease, and famines, they will never be able to catch up with the rest of the world.

d.wrong because Latin American and African countries have not been able to grow.

4.Suppose that nominal GDP is $1,000 in 2009 and $1,500 in 2010. If the overall price level increased by _____% between 2009 and 2010, we could say that real GDP _____.

Select one:

a.less than 50; decreased

b.more than 50; increased

c.50; stayed constant

d.50; increased

5.Increases in unemployment compensation:

Select one:

a.increase the number of jobs available.

b.increase unemployment.

c.reduce unemployment.

d.decrease the number of jobs available

6.Suppose that a panel of economists predicts that a nation's real GDP per capita will double in approximately 20 years. According to the rule of 70, what must be the predicted annual growth rate of real GDP per capita?

Select one:

a.2.85%

b.140%

c.3.5%

d.14%