Questions and Answers of Economics Of The Public Sector

In a closed economy, private savings plus government savings must equal investment:a. Draw a savings-investment diagram to show the effect of an increased budget deficit.b. Assume that the increased
Consider a small open economy with a perfectly elastic supply of savings at interest rate r*, which is below the interest rate that would have prevailed in the economy if it could not have borrowed,
The real value of the debt (in 1995 dollars) in 1995 was $3.6 trillion and in 1980 was $1.3 trillion. Assume that 50 percent of this buildup in the debt would have gone into investment, so the
One proposal to contain the deficits is a balanced budget amendment to the Constitution, that would require the government to maintain a balanced budget every year.a. Explain why, if the economy goes
Should expenditures on health care for children be considered an “investment” in a capital budget? What other expenditures might legitimately be classified as “investment”?
Assume the government sells some of the land it currently rents out for grazing. Should the revenues received be counted as reducing the deficit? How would the transaction be treated under a capital
Why does the way government achieves deficit reduction make a difference for economic growth?a. Assuming that the government raises taxes on interest income, what is the total impact on national
Throughout the text, we have emphasized how different government actions affect various groups in the population differently.a. Assume the government is considering whether to finance a war by
"If there are groups in the population who differ in their labor supply elasticity, they should be taxed at different rates." Justify this in terms of the theory of optimal taxation, and discuss its
Earlier, we noted that consumption at different dates could be interpreted just like consumption of different commodities at the same date. What do the results on optimal taxation imply about the
Discuss the incidence of a city wage tax.
The government rations a variety of publicly provided private goods and impure public goods in which there is congestion in a variety of ways. Discuss how each of these is rationed, and consider the
To what extent do you think differences in views between advocates of less spending on public goods and advocates of more spending can be attributed to different assessments of the marginal cost of
What happens to the efficient allocation between public and private goods as an economy becomes wealthier? Can you think of examples of public goods, the consumption of which would increase more than
If the primary objective of government programs in each of these areas is the alleviation of some market failure, how might they be better designed?a. Farm price supportsb. Oil import quotas (in the
Many government programs both redistribute income and correct a market failure. What are the market failures associated with each of these programs, and how else might they be addressed if there were
Where should each of the following goods lie in Figure 5.2? Explain why each is or is not a pure public good. Where applicable, note instances where the good is both publicly and privately
For each program listed below, discuss what market failures might be (or are) used as a partial rationale:a. Automobile safety belt requirementsb. Regulations on automobile pollutionc. National
An individual is indifferent among the combinations of public and private goods shown in the following table.Draw the individual's indifference curve. Assuming that the economy can produce one unit
Consider an economy that produces two goods, cars and shirts. Explain why if a tax is imposed on the consumption of cars but not on shirts, the economy will not exhibit product mix efficiency.
Draw the average and marginal cost curves for a natural monopoly. Draw the demand and marginal revenue curves.a. Show the efficient level of output, at which price equals marginal cost. Explain why
Advocates of small businesses often argue that they should receive special tax treatment. Assume that small businesses had to pay only half the Social Security tax that is imposed on large
Explain why a tax that is levied only on the use of capital by corporations will interfere with the production efficiency of the economy. (Compare the marginal rates of technical substitution between
Can you think of other common practices and policies that might interfere with exchange efficiency?
Doctors often charge patients different amounts depending on their judgment concerning the patients’ ability to pay. What implications does this have for exchange efficiency?
Explain why an economy in which airlines charge different passengers different prices for the same flight will not have exchange efficiency.
Assume you were President and your planned expenditures exceeded your receipts. Describe some of the tricks you might use to reduce the apparent budget defi cit while maintaining current levels of
In each of the following areas, give an example of a tax expenditure and a conventional expenditure.Explain how the same results could be obtained by converting the tax expenditure into a
In each of the following areas, give one or more examples (where possible) in which the government is involved as a producer, a regulator, or a purchaser of fi nal goods and services distributed
To see what is going on, economists often "adjust" the data to refl ect changes in the economy. For instance, in the text, we discussed the adjustments in dollar amounts made to correct for infl
There has been considerable concern that our Social Security (old age and survivors insurance) program is not adequately fi nanced: with expected birth rates, death rates, and increases in payroll
For each of the following programs, identify one or more "unintended" consequences:a. Rent controlb. Minimum wagesc. Medicare (free hospital care to the aged)d. Improved highways making suburbs more
Consider the following discussion of a program of price supports for farmers:a. The objective of our farm program is to ensure that all farmers have a reasonable standard of living. The way it does

Showing 200 - 300 of 233

1
2
3