Briefly discuss the source of federal government revenues. Give special attention to the evolution of revenue sources since the 1960s. What will be an ideal response? ANSWER Just as in 1960, the bulk of federal revenues come from individual income taxes. In 1960, 44 percent came from individual income taxes and in 2000 49.6 […]
The utility maximizing consumption bundle for an individual can be found by locating _____. a. the individual’s bliss point b. any point on an indifference curve touching the budget constraint c. the highest point on an individual’s indifference curve d. the point tangent to an individual’s budget constraint ANSWER d
When isolating the substitution effect of a change in an individual’s budget constraint, _____ is held constant. a. utility b. budget c. income d. consumption ANSWER c
If an individual’s budget constraint shifts, the individual’s changes in consumption can be broken down into _____ and _____ effects. a. budget; consumption b. income; substitution c. utility; indifference d. wealth; savings ANSWER b
For goods on which a relatively small portion of income is expended, _____. a. income effects will be small relative to substitution effects b. income effects will be large relative to substitution effects c. income effects will be about the same as substitution effects d. there will be no income effects. ANSWER a
In a representative democracy, some responsibility for government extends to all citizens. a. True b. False Indicate whether the statement is true or false ANSWER TRUE
Markets do not always allocate resources efficiently, however, government always does. a. True b. False ANSWER b
U.S Postal Service spending is generally not included in total government expenditures. a. True b. False ANSWER a
Federal government expenditures account for more than two-thirds of the money spent in the public sector. a. True b. False ANSWER b
The deficit is financed through new taxes. a. True b. False ANSWER b
