Adverse selection can occur when A) all persons involved in a transaction have full information. B) one person has information not available to others. C) post-agreement incentives result in workers shirking. D) nobody has any information about a particular product. ANSWER B
Date: September 9th, 2020
When an income tax has a progressive rate structure, _____. a. average tax rates are higher than marginal tax rates b. marginal tax rates are higher than average tax rates c. marginal tax rates are constant across all income ranges d. average and marginal tax rates are equal across all income ranges ANSWER b […]
Date: September 9th, 2020
The managers of government bureaucracies have an incentive to _____ a. maximize the size of their budgets b. minimize the size of their staff c. maximize the profits from their bureaus d. minimize rent-seeking ANSWER a
Date: September 9th, 2020
To understand how decisions about military expenditures are made, it is probably most important to understand _____. a. geography b. economic warfare c. the political process d. strategic alliances ANSWER c
Date: September 9th, 2020
Which of the following is not a source of rents? a. Tariffs b. Logrolling c. Price supports d. Entry barriers ANSWER b
Date: September 9th, 2020
If the backward-bending supply curve for labor has relevance for public finance, it is because _____. a. at really high wage rates there will be insufficient labor to meet aggregate demand b. there is a trade-off between leisure and labor c. income taxes do no raise sufficient revenue to pay for public goods because individuals […]
Date: September 9th, 2020
Military expenditures in democratic nations may be _____. a. too low because politicians have long time horizons b. too low because politicians have short time horizons c. too high because politicians have long time horizons d. too high because politicians have short time horizons ANSWER b
Date: September 9th, 2020
The head of a stable dictatorship is likely to have _____ the president of the United States. a. the same time horizon as b. a shorter time horizon than c. a longer time horizon than d. a shorter tenure than ANSWER c
Date: September 9th, 2020
The Laffer Curve demonstrates that _____. a. at some level of tax rates, tax revenues decline b. there is no relationship between tax rates and tax revenue c. there is no relationship between tax rates and labor supply d. at some level of tax rates, labor supply declines ANSWER a
Date: September 9th, 2020
The welfare costs of rent seeking will approximate _____. a. the value of the resources expended in lobbying b. the deadweight loss of taxation c. the value of the rent-seeking benefits d. zero if political markets are perfectly competitive ANSWER c
Date: September 9th, 2020
