Macroeconomics EconLab 2

Over the long run, this government fundamental revenues are equal to

$1,100

Suppose a government has access to the following sources of funding currently as well as over the long run: Taxes $1000 User charges $100 Boorowed Funds $250 In the current time period, this governments spending on goods and services and transfer payment is limited to

$1,350

Suppose that, as part of an expansion of its State Care health system, a state government decidedes to offer a $50 subsidy to all people who, according to their physicians, should have their own blood pressure monitoring services... After the government expands its state care plan in this state 40,000 devices $60 per unit

$10, 1.4million,83%, 17%

Jarius marginal tax rate is ____ percent

10

Megs marginals tax rate is ____ percent

15

A senior citizen gets a part time job at a fast food restaurant. She earnes $10 per hour for each hour she works, and she works exactly 25 hours per week. Thus her total pretax weekly income is $250. Her total income tax assessment each week is $45, but she has determined tht she is assessed $4 in taxes for the final hour. This person average tax rate each week is ____ percent

18%

The marginal tax rate for the last hour she works each week is ____ percent

40

Christianos marginal tax rate is _____percent

5

Which of the following is consitent with dynamic tax analysis?

An increase in the tax rate will likely cause a decrease in the tax base

There are simultaneous changes in the demand for and supply of global positioning system (GPS) devices, with the consequences being an unambiguous increases in the market clearing price of these devices but no change in the equilibrium quantity. What changes in the demand for and supply of GPS devices could have generated these outcomes?

Demand increases and supply decreases.

Which of the following is not a difference between market and collective decision making?

Government goods are costles to produce, while private goods have production costs.

What is the relationship between tax rates and tax revenues?

Increasing tax rates will initially increases tax revenues. Eventually an increase in the tax rate will erode the tax base and revenues will decrease.

The French government recently allocated the equivalent of more than $120 million in public funds to Quareo, an internet search engine analogous to Google or Yahoo.

It is a government sponsored good, deemed socially desirable through the political process.

The government places a $5 per unit tax on sale of wigets. Which of the following is the most likely result?

Most of the tax will be paid by consumer.

Does an Internet search engine satisfy the key characteristics of a public good?

No, it can be consumed simultaneously by many users at little or no additional cost, but the advertising space is limited, and advertisers can be excluded.

Which of the following explains the difference between the average tax rate and the marginal tax rate?

The average tax rate uses total income while the marginal tax rate refers to the tax rate of the last dollar earned.

In a market system, how are the terms of exchange established?

The forces underlying supply and demand interact to set a price.

How will the market wage and equilibrium quantity of labor services provided by custodial workers be affected by the imposition of rent controls?

The market wage will fall and the equilibrium quantity will fall.

Suppose that owners of high rise office buildings are the main employers of custodial workser in a city. The city has decided to impose rent controls, and it has established a rent ceiling below the previous equilibrium rental rate for offices throughout the city. How will the quantity of offices that builiding owners lease change?

The quantity of office building supplied will decrease.

Suppose that a rap group called RG2 has released its first CD with Live Records at an intended list price of $14.99. Music stores have discovered that they can markup the price of $17.99 with continued strong sales. What information does this higher price convey to the recording label?

The recording label should expand the production and distribution of RG2's first CD

A price ceiling is

a government imposed maximum price that may be charged for a good service, which can lead to shortages.

Suppose that the U.S. government determines that cigarette smoking creates social costs not reflected in the current market price and equilibrium quantity of cigarettes. A study has recommended that the government can correct for the externality effect of cigarettes consumption by paying farmers not to plant tobacco used to manufacture cigarettes. It also recommends raising the funds to make these payments by increasing taxes on cigarettes. These actions by the government lead to all the following outcomes, except.

an increase in the negative externality caused by cigarette smoking.

A cost or benefit of an economic activity that has an impact on an individual's well being, even though the individual was not directly involved in the activity, is known as a(n)

externality

One reason that collective and private decision making differ is

individuals working in the government sector face a different incentive structure that those in the private sector

Over the long run any government's fundamental revenue sources are

taxes and user charges

Market failure occurs when

the unrestrained market economy leads to too few or too many resources going to a specific economic activity.

A government is considering two alternative plans for providing subsidy to private school.... The outcomes of the two planes

will be different; under the first plan where a private school directly receives the subsidy, it will provide a quantity of educational services in excess of the market equilibrium quantity.