Fiscal policy is defined as OA. the use of Congressional power to pursue social and political goals. B. the discretionary changing of government expenditures and/or taxes to achieve macroeconomic economic goal C. the design of a tax system to transfer income from large corporations to the poor. O D. the use of the taxing power of the government to redistribute wealth in a socially acceptable manner.

c. A progressive tax d. A regressive tax QUESTION 3 Corporate profits are a. taxed to pay for Medicare. b. exempt from taxes. c. included in payroll taxes. d. taxed twice, once as profit and once as dividends. QUESTION 4 A value-added tax or VAT is a tax on a. retail purchases only. b. pollution. c. all stages of production of a good. d. wholesale purchases only. QUESTION 5 Table 12-17 INCOME $50,000 100,000 200,000 AMOUNT OF TAX $12,500 (25%) $25,000 (25%) $50,000 (25%) TAX A

3. Question 3 options:   Economic policies that involve government spending and taxes are known as                   .

Suppose that before tax was imposed 400 million gallons of gasoline was supplied at $3.00 per gallon.a. What happens when government imposes a tax of 60 cents per gallon on sellers? b. How would such a tax affect the market for gasoline i.e. what is the new equilibrium? c. On whom does the incidence of the tax fall more heavily? d. How much government revenue will be generated by the excise tax? e. What happens when government imposes a tax of 60 cents per gallon on buyers? f. How would such a tax affect the market for gasoline i.e. what is the new equilibrium?