ilide info public finance and public policy solutions manual pr
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ilide info public finance and public policy solutions manual pr
Solutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr the state to provide for an "adequate” level of education spending. What is the economic rationale for such a requirement?There are two economic rationales for government provision of a good or service: market failure and redistribution. A market failure argument for state provision of education wo ilide info public finance and public policy solutions manual pr uld be that an educated population benefits society generally because, for example, well-educated individuals have better job prospects and are therefilide info public finance and public policy solutions manual pr
ore less likely to commit crimes. Each person who receives an education receives a private benefit (c.g.. higher wage rate) and also confers a positivSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr an-optimal levels of education because they would not take into account its external benefit. Public education can correct this market failure. An argument can also be made that public education is redistributive because it increases the human capital of all students regardless of their individual e ilide info public finance and public policy solutions manual pr conomic status.2.How has the composition of federal and state and local government spending changed over the past 40 years? What social and economic filide info public finance and public policy solutions manual pr
actors might have contributed to this change in how governments spend their funds?Since 1960. there has been a marked shift of federal spending away fSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr budget, while Social Security and health care combined accounted for about 15% of the budget. In 2001, Social Security and health care spending each exceeded defense spending, which accounted for less than 20% of total federal spending.I Icalth spending has also increased as a fraction of state and ilide info public finance and public policy solutions manual pr local spending, more than doubling over the last 40 years. Otherwise, the composition of the state and local spending has been relatively stable overilide info public finance and public policy solutions manual pr
that time.The increases in expenditures on Social Security and health care reflect the aging of the population. As the baby boom generation has aged,Solutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr s, which has allowed them to win increases in spending directed toward their interests.The relative decrease in defense spending may have been influenced by the collapse of the Soviet Union and the end of the cold war.CHAPTER I / Why Study Public Finance?- 2 -3.Some goods and services are provided d ilide info public finance and public policy solutions manual pr irectly by the government, while others are funded publicly but provided privately. What is the difference between these two mechanisms of public finailide info public finance and public policy solutions manual pr
ncing? Why do you think the same government would use one approach sometimes and the other approach at other times?Direct public provision of a good oSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr g of private provision of goods and services occurs when the government wishes to increase the provision of a good or service, but it does not want to directly involve itself in its provision. An example is when the government hires private companies to build or repair roads, or when the government ilide info public finance and public policy solutions manual pr purchases military aircraft from private companies instead of building them itself.Public funding for private provision is appealing relative to direcilide info public finance and public policy solutions manual pr
t public provision whenever the private market can produce the goods or services more efficiently than the government. This is likely to be the case wSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr a good or service provided by the government, or when that market is characterized by an imperfectly competitive industry, there may be a stronger case for direct provision (although it is important to recognize that direct provision can also suffer from efficiency failures). There may be national ilide info public finance and public policy solutions manual pr security concerns related to private provision of certain goods and services, especially those performed by the military and police forces. The governilide info public finance and public policy solutions manual pr
ment is more likely to provide these goods and services directly.4.Why docs redistribution cause efficiency losses? Why might society choose to redistSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr ere arc behavioral responses to the redistribution system. The government might raise money to fund redistribution by imposing a tax on labor income, and this might cause a reduction in the labor supply. Similarly, generous unemployment benefits might induce some who arc out of work to remain unempl ilide info public finance and public policy solutions manual pr oyed. Despite these possible efficiency losses, we (collectively) choose to redistribute wealth. Some reasons for redistribution are that people haveilide info public finance and public policy solutions manual pr
a taste or preference for a certain degree of economic equity; that the existence of a large or visible underclass is somewhat discomforting or threatSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr rc naturally empathetic. In a country with many very poor people, redistribution from the few rich to the many poor may make the majority of people better off. even if it reduces the overall size of the pic. A democratic process may therefore lead to the occurrence of this sort of redistribution.5.C ilide info public finance and public policy solutions manual pr onsider the four basic questions of public finance listed in the chapter. Which of these questions are positive—questions that can be proved or disproilide info public finance and public policy solutions manual pr
ved—and which are normative—questions of opinion? Explain your answer.The four basic questions of public finance:1.When should the government intervenSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr ervene? This question is positive. It asks: How docs the government actually intervene now. and how might it intervene in the future? One can check whether a government might intervene in a particular way directly by examining the behavior of existing and future governments.3.What is the effect of t ilide info public finance and public policy solutions manual pr hose interventions on economic outcomes? Economic effects can be measured and thus are not a matter of opinion, so this question is positive.CHAPTER 1ilide info public finance and public policy solutions manual pr
Í Why Study Public finance?4.Why do governments choose to intervene in the way they do? This is a tactual (positive) question. It may be difficult toSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr or over time.6.One rationale for imposing taxes on alcohol consumption is that people who drink alcohol impose negative spillovers on the rest of society—for example through loud and unruly behavior or intoxicated driving. If this rationale is correct, in the absence of governmental taxation, will p ilide info public finance and public policy solutions manual pr eople tend to consume too much, too little, or the right amount of alcohol?People demand goods primarily on the basis of their own enjoyment of that gilide info public finance and public policy solutions manual pr
ood. They tend to underweight the impact of their consumption on the well being of others. In the ab scncc of taxes on alcohol, people will tend to coSolutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr of the Congressional Budget Office? Why is independence and impartiality important when conducting empirical analyses?The CBO provides economic analyses of proposed legislation, particularly estimates of the cost of proposed projects. To do this accurately and to provide the best possible advice to ilide info public finance and public policy solutions manual pr Congress, the CBO must carefully consider all the economic effects of a proposal. A politically motivated CBO might be tempted to understate some costilide info public finance and public policy solutions manual pr
s or overstate others in order to influence legislation.8.In order to make college more affordable for students from families with fewer resources, a Solutions and Activities for CHAPTER 1WHY STUDY PUBLIC FINANCE?Questions and Problems1.Many states have language in their constitutions that requires ilide info public finance and public policy solutions manual pr t and possible indirect effects of such a policy.This policy would make college cheaper for students from families with less than $50.000 in savings. There would be two direct effects of this policy. First, it would make the families of students who already intended to attend college better off if t ilide info public finance and public policy solutions manual pr he families that were saving had less then $50.000 in savings. Second, it would probably encourage additional students from low-savings families to atilide info public finance and public policy solutions manual pr
tend college. A potential indirect effect of this policy would be to reduce the savings of other families families that were saving money for a collegGọi ngay
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