An increase in an input price will shift the market supply?
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leftward, thus increasing market price.
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which of the following is an example of a transfer in kind?
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food stamps
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Which of the following is not a difference between market and collective decision? making?
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Government goods are costless to? produce, while private goods have production costs.
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The fundamental limitation on public expenditures during a specific time interval is expressed by
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the government budget constraint.
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Over the long? run, this? government's fundamental revenues are equal to
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Over the long term a government must ultimately rely on taxation and user charges.
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Marginal tax? rate
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The change in the tax payment divided by the change in? income, or the percentage of additional dollars that must be paid in taxes. The marginal tax rate is applied to the highest tax bracket of taxable income reached.
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What is the structure of the U.S. income tax? system?
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The U.S. income tax system has an increasing average tax rate that is exceeded by the marginal rate. This makes it a progressive tax system.
The U.S. income tax system is a progressive tax system where the marginal tax rate exceeds the average tax rate.
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Suppose that a state government implements a tax on? mechanics' labor time at all state auto repair shops in order to enhance its tax revenues. One year later the government is disappointed to find that not only is the amount of tax collected? small, but that? in-state auto repair work significantly declined. This state government apparently utilized which type of tax? analysis?
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Static tax analysis.
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Static tax analysis
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evaluates the effects of tax rate changes under the assumption that the changes will not impact the tax base.
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Excise tax
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A tax levied on purchases of a particular good or service.
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Market failure occurs when
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the unrestrained market economy leads to too few or too many resources going to a specific economic activity.
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When there are too few or too many resources going to an economic? activity
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market failure
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An economic activity in which benefits or costs affect third parties is called
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an externality.
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One reason that collective and private decision making differ is
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individuals working in the government sector face a different incentive structure than those in the private sector.
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When comparing market and public sector decision? making, which statement is NOT? true?
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In both decision making? sectors, there are scarcity constraints.
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Which of the following is the most important source of revenue for the federal? budget?
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The federal personal income tax.
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Local government expenditures depend on which? taxes?
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Local? property, sales, and excise taxes
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Which of the following is consistent with dynamic tax? analysis?
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an increase in the tax rate will likely cause a decrease in the tax base
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A good that has been deemed socially desirable through the political process is known as
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merit good
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Subsidizing medical services through Medicare
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raises the price per unit of medical care received by producers.
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Market failure occurs when
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Market failure is said to occur when the unrestrained market economy misallocates resources to a specific economic activity. This can occur if some costs? and/or benefits are not reflected in the market.
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Market failure occurs because
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the market system does not make individuals responsible for the social? costs/benefits of their actions
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externality
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Any consequence of an economic activity that spills over to affect third parties? (those not directly involved in a given activity or? transaction)
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An effluent fee refers to
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a government regulation which specifies a maximum allowable rate of pollution.
