One reason a gift card might be less desirable than cash? A) A gift card requires an individual to purchase from a particular store, which restricts the choice set. B) Cash requires an individual to purchase from a particular country, which restricts the choice set. C) Cash and the gift card are equally desirable, there […]
Suppose Seth and Nathan are college students with the same annual income, yet Seth pays half of the annual income tax that Nathan does. Which statement best summarizes a possible issue with this outcome from a principle of tax policy perspective? a. It violates the principle of vertical equity. b. It violates the principle of […]
As the percentage of a group required for agreement approaches 100 percent, _____ costs _____. a. decision-making costs; increase b. decision-making costs; decrease c. political costs; increase d. political costs; decrease ANSWER a
The principle of horizontal equity is satisfied when _____. a. individuals receiving the same benefits end up paying the same in taxes b. the public interest is being met c. all individuals pay the same tax d. individuals with an equal ability to pay end up paying the same in taxes ANSWER d
The socialization rationale for public education implies that private schools _____. a. are more segregated along class and perhaps racial lines b. are more homogenous c. are often organized around an exclusionary orientation d. all of the above ANSWER d
The ability-to-pay principle states that _____. a. individuals should pay taxes in proportion to their ability to pay b. individuals should not move to localities where they cannot pay the taxes c. individuals should not use government programs unless they contribute something in taxation d. individuals should pay taxes only if they benefit ANSWER […]
A unanimity rule for collective decision making has the disadvantage of _____. a. accepting too many inefficient outcomes b. high decision-making costs c. not clearly being a Pareto improvement d. increasing external costs ANSWER b
Adam Smith noted that when public expenditures are undertake for the general benefit of everyone in a society then _____. a. there is considerable conflict between the benefit principle and the ability-to-pay principle b. there is no conflict between the benefit principle and the ability-to-pay principle c. the benefit principle provides little guide to tax […]
Equalization of resources across school districts would be less of a concern if _____. a. there was no link between spending and achievement b. there was a strong link between spending and achievement c. classroom teachers were better paid d. taxpayers were willing to spend more ANSWER a
The fact that positive externalities may exist in education is not enough to justify government involvement. To justify government involvement, it must be shown that _____. a. the effect of the externalities are large b. the externalities are inframarginal c. people do not internalize the externalities d. education is an investment good ANSWER b […]
