Voters rarely get to choose the exact level of spending on a public good. Instead, they are provided with two options—a proposed spending level posed by the government and a default (or “reversion”) level that would be enacted if the proposal were rejected by voters. The Leviathan theory suggests that governments will select intentionally large proposed spending levels and default levels that are well below the desired level of spending. Why is this behavior consistent with a size-maximizing government?
Answer to relevant QuestionsRefer to Table 4-1, which reports the composition of the U.S. generational accounts. Why might the political system in the United States have led to this pattern of intergenerational transfers? Think about two public goods—public schools and food assistance for needy families. Consider the implications of the Tiebout model. Which of the goods is more efficiently provided locally? Which is more efficiently ...The Individuals with Disabilities Education Act mandates that states and localities provide appropriate education for all students identified as having special needs. States have responded by funding special education using ...Several researchers have found evidence of sheepskin effects, in which the labor market return to twelfth grade is higher than the return to eleventh grade and the return tithe fourth year of college is higher than the ...One way to structure a student loan repayment plan is to make it income-contingent—that is, to relate the amount that a student would have to repay in any given month to how much income he or she earns. How might the ...
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