Exam 18: Public Choice, taxes, and the Distribution of Income

The public choice model raises questions about the government's ability to regulate economic activity efficiently.Which of the following statements represents the views of most economists with regard to the role of government?

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few,while harming the interests of a larger group of people.

The public choice model can be used to examine voting models that contrast the manner in which collective decisions are made by governments (state,local,and federal)and the manner in which individual choices are made in markets.Which of the following descriptions is consistent with the difference between collective decision-making and decision-making in markets?

The person or firm that pays a tax bears the burden of the tax.

The public choice model asserts that the self-interest of policymakers is likely to cause them to take actions that are inconsistent with the preferences of voters,even where those preferences are clear.

Income inequality increases as the Gini coefficient approaches 1.

Which of the following is an example of rent seeking behavior?

Figure 18-1 -Refer to Figure 18-1.Of the tax revenue collected by the government,the portion borne by consumers is represented by the area

The federal corporate income tax is

Exemptions and deductions are used

A common belief among political analysts is that someone running for his or her party's nomination for president of the United States must choose a different strategy once the nomination is secured.To be nominated,the candidate must appeal to voters from one party-Democrat or Republican-but in a general election a party's nominee must appeal to voters from both parties as well as independent voters.Which of the following offers the best explanation for this change in strategy?

What is the difference between the poverty line and the poverty rate?

Between 1980 and 2014,income inequality in the United States has increased in part due to expanding international trade.How does expanding international trade contribute to income inequality?

The complexity of the U.S.federal income tax system results in significant annual deadweight losses.The opportunity cost of the hours taxpayers spend on record keeping and completing their tax returns amounts to billions of dollars. a.If the tax system was simplified,how would this benefit the economy? b.Why hasn't the tax system been simplified?

Which of the following is an example of a federal mandate?

Table 18-3 Imrnigration Reform Unemplayment Benefits Social Security Reform Bart 1st 3rd 2nd Lisa 2nd 1st 3rd Maggie 3rd 2nd 1st -Refer to Table 18-3.The table above outlines the rankings of three members of the U.S.Senate on three spending alternatives.Assume that Congress can spend additional revenue on only one of the three spending alternatives and that Bart,Lisa,and Maggie,all members of the Senate,participate in a series of votes in which they are to determine which of the spending alternatives should receive funding.Three votes will be taken: (1)Immigration Reform and Unemployment Benefits (2)Immigration Reform and Social Security Reform and (3)Unemployment Benefits and Social Security Reform. Show the results of each vote and determine whether the voting paradox will occur as a result of these votes.

Public schools in the United States get most of their operating funds from

The median voter theorem states that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle.

The largest source of revenue for the federal government of the United States is from