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 […]
Date: September 9th, 2020
On any given day we know a salesman can earn $0 with a 30% probability, $100 with a 20% probability or $300 with 40% probability. His expected earnings equal A) $0. B) $140. C) $300. D) It cannot be determined from the available information. ANSWER B
Date: September 9th, 2020
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 […]
Date: September 9th, 2020
On any given day, a salesman can earn $0 with a 30% probability, $100 with a 20% probability, or $300 with a 50% probability. His expected earnings equal A) $0. B) $100. C) $150. D) $170. ANSWER D
Date: September 9th, 2020
Why do individuals demand health insurance? Does the health insurance provided through most employers more or less than people would get if purchased on their own? Why What will be an ideal response? ANSWER Individuals primarily demand health insurance to protect themselves against low probability but extremely expensive medical expenses. The type of comprehensive […]
Date: September 9th, 2020
Can the median voter model help explain why third parties have generally not been successful in the United States? Explain why or why not. What will be an ideal response? ANSWER Yes, the median voter can help explain why third parties have generally not been successful in the United States. Under a majority rule […]
Date: September 9th, 2020
Define moral hazard and adverse selection in the context of health insurance markets. Make sure to discuss why they are problems for health insurance markets. What will be an ideal response? ANSWER Moral hazard is when an insured individual has some control over the events that trigger a payment from the insurance company. This […]
Date: September 9th, 2020
On any given day, a salesman can earn $0 with a 20% probability, $100 with a 40% probability, or $300 with a 20% probability. His expected earnings equal A) $0. B) $100 because that is the most likely outcome. C) $100 because that is what he will earn on average. D) $200 because that is […]
Date: September 9th, 2020
Transforming the tax base of an income tax by subtracting savings has the advantage that _____. a. a progressive rate structure can be applied to a consumption tax b. all income can be taxed at a flat rate c. it double taxes income d. it guarantees progressivity ANSWER a
Date: September 9th, 2020
In a world with saving, making an income tax a consumption tax would require the tax base to be _____. a. income b. income minus savings c. consumption plus investment d. comprehensive ANSWER b
Date: September 9th, 2020
