Question

Can you please state true false or uncertain and explain the reasoning in 4 or more sentences

4)If the amount of tax paid by an individual with income level Y is equal to T(Y) = X + 0.3Y, then if X = 0 the tax is proportional, while if X < 0 the tax is progressive.

5)The direct and excess burdens from an excise tax are greater the less elastic is demand in the market. [Hint: Assume perfectly elastic supply.]

6) The measured unemployment rate can only decrease if some of those unemployed get jobs and become counted as employed.

Answer 1

4) In the given statement, there are two situtations which i would like to answer differently.

1. The first situation is true in which X =0. As when the X=0 the tax rate will remain same for every individual which is 0.3 of Y.
2. In second situation , where X<0 , the tax lieved will be decrease the value of actual tax. So this statement is false. It could be true if X>0 was the situation.

5) This statement is false as if the taxes (exice tax) are greater than it will have a direct impact on the price of the commodity. It will given a drift to the price because of which the demand of the commodity will suffer and will be lower than before. Hence tge elasticity of demand is high not less. (As per law of demand)

6) This is true. As the unemployment rate can be decreased by employing more and more people. If the person who can do a job, is willing to work but is not getting the work is considered unemployed. And hence creating employement opportunities will help in decreasing unemployment.