From 1960 to 1980, federal government spending on national defense _____. a. declined from about half to less than one quarter of all expenditures b. declined from one-third to less than one quarter of all expenditures c. increased from about half to nearly 60 percent of all expenditures d. increased from about one quarter to […]
Income taxes tend to be favored over sales taxes _____. a. because of the excess burden on income taxes b. on the benefit principle c. on equity grounds d. as long as income as defined using the Haig-Simons definition ANSWER c
Describe the operation of the Medicare program. Discuss who is covered under the program, how it is financed and the distinction between Part A and Part B of the program. What will be an ideal response? ANSWER Medicare was established in 1965 and provides health care benefits to over 40 million elderly Americans. The […]
List and describe two issues regarding incentives and information that explain why the median voter model might not accurately describe democratic decision-making. What will be an ideal response? ANSWER Rational ignorance and special interests are two of the primary reasons why the median voter model might not accurately describe the results of democratic decision-making. […]
In 1960, national defense comprised about _____ of federal government expenditures. a. one quarter b. one-third c. one half d. two-thirds ANSWER c
An income tax provides an incentive to _____. a. work for large companies b. increase investment c. substitute away from being self-employed d. consume more and save less ANSWER d
Assuming that the two key restrictions on preferences fundamental to the median voter model hold, list the condition that must be satisfied for the outcome preferred by median voter to be considered economically efficient. List one real world example that comes close to this condition. ANSWER In order for the outcome preferred by the […]
True or false? The Edgeworth box version of inter-personal trade requires the individuals to be in close proximity of one another. A) True, that way they can see each other’s endowments and prices. B) False, begin in close proximity is not required for mutually beneficial trade to occur in the Edgeworth box. C) True, the […]
Under what conditions might the median voter’s preferred outcome not be selected through majority rule? What will be an ideal response? ANSWER The median voter’s preferred outcome might not be selected through majority rule if one or more voters have multiple-peaked preferences. That is, a particular voter might prefer an outcome farther away from […]
You are a government tax policy advisor. You are asked how to convert the U.S. income tax into a consumption tax. Which of the following is the best response? a. It already is a consumption tax. b. Flatten the brackets into one rate. c. Exclude the first $25,000 of income. d. Allow unlimited contributions into […]
