Question 1

Money payments by governments to individuals for which no services or goods are supplied are

Accepted Answer

Transfer payments are money payments made by the government to individuals without any corresponding service or good being provided in return. These payments are usually made to support specific groups or individuals in need, such as the elderly, unemployed, disabled, or low-income families. Examples of transfer payments include welfare, social security, Medicare, and Medicaid benefits. Black market payments refer to illegal and unreported money transactions, merit payments are rewards for good performance or achievement, and demerit payments are penalties for poor performance or wrongdoing.

Question 2

Scholarships awarded to students with high Grade Point Averages are an example of

Accepted Answer

Scholarships awarded to students with high Grade Point Averages are considered transfer payments because they are payments made by the government or institutions to individuals for which no goods or services are exchanged directly. These are typically aimed at providing financial support or incentives.

Question 3

Government goods are

Accepted Answer

Government goods refer to any goods supplied by the government, which can include both public goods (like national defense) and private goods (like postal services).

Question 4

Transfer payments are payments

Accepted Answer

Transfer payments are payments made by the government to individuals or groups for which no goods or services are provided in return. These payments are typically made to support specific groups or to achieve certain policy goals, such as reducing poverty, promoting economic growth, or supporting education. Examples of transfer payments include Social Security benefits, welfare payments, and government subsidies for industries or agricultural producers.

Question 5

Rational ignorance refers to the idea that

Accepted Answer

Rational ignorance suggests that decision-makers often choose to act with less than perfect information because the cost of acquiring complete information may outweigh the benefits of their decision. This can lead to suboptimal outcomes due to incomplete or incorrect information.

Question 6

The marginal tax rate shows

Accepted Answer

The marginal tax rate shows the extra tax due on an extra dollar of income. This means that as an individual's income increases, the amount of tax paid on each additional dollar earned also increases. It is not the average rate of taxation in the economy, deductions permitted for specific expenses, or the percentage of income a typical family pays in tax.

Question 7

A consumer who buys a product without having compared prices at nearby stores

Accepted Answer

This consumer is acting rationally by not comparing prices if the costs of doing so, such as transportation or time, are greater than the possible savings. This is known as rationally ignorant behavior.

Question 8

The system of rewards and punishments decision-makers face is called the

Accepted Answer

The incentive structure refers to the pattern of rewards and punishments that decision-makers face. This structure shapes the choices they make, as they weigh the benefits and costs of each option. Therefore, option A is the best choice as it accurately describes the concept mentioned in the question. Option B is incorrect as it only refers to the positive aspect of the structure. Option C is not relevant to the context, and option D is vague and does not specify any particular structure.

Question 9

Suppose the income tax rate schedule is 0% on the first $10,000;10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on any income over $70,000.Dennis,who has been earning $28,000 a year,receives a ten percent raise.The additional tax he will he have to pay is $________.

Accepted Answer

The answer of Suppose the income tax rate schedule is...

Question 10

The study of collective decision making is also known as the theory of

Accepted Answer

The study of collective decision-making is known as public choice theory. This field explores how individuals and groups make decisions that affect society as a whole, including voting behavior, government regulations, and public policy. Therefore, option B, public choice, is the most appropriate choice.

Question 11

Suppose the tax rate on the first $10,000 of income is zero;10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on income over $70,000.Family A has an income of $120,000 and Family B an income of $55,000.The tax bill will be ________ for A and ________ for B.

Accepted Answer

The answer of Suppose the tax rate on the first...

Question 12

Someone who votes for an election candidate without thoroughly investigating the candidate's position on all issues

Accepted Answer

A voter who votes for an election candidate without thoroughly investigating their position on all issues is rationally ignorant if they expect the cost of gaining the information to be greater than the benefits. It would be impractical and costly for a voter to become fully informed about every candidate and issue in an election, especially when some issues may not be important to the voter's personal values or beliefs. Therefore, it is rational for voters to prioritize the issues that matter most to them and gather information on a candidate's position on those issues only.

Question 13

The theory of public choice is

Accepted Answer

The theory of public choice is concerned with analyzing collective decision making and how public officials and politicians make decisions. It explores how people in positions of power make decisions based on their own self-interest and incentives, rather than solely for the benefit of the public. This theory is not directly concerned with analyzing election outcomes, market outcomes, or political poll results.

Question 14

Suppose the income tax rate schedule is 0% on the first $10,000;is 10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on any income over $70,000.Dennis,who has been earning $28,000 a year,receives a ten percent raise.How much additional tax will he have to pay?

Accepted Answer

The answer of Suppose the income tax rate schedule is...

Question 15

Suppose the tax rate on the first $10,000 of income is zero;it is 10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on income over $70,000.Family C has an income of $100,000.What is the family's income tax bill?

Accepted Answer

The family's income tax is calculated as follows: $0 for the first $10,000; 10% of $20,000 ($2,000); 20% of $20,000 ($4,000); 30% of $20,000 ($6,000); and 40% of $30,000 ($12,000). Adding these amounts gives a total tax bill of $24,000.

Question 16

Suppose the tax rate on the first $10,000 of income is zero;it is 10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on income over $70,000.Family A has an income of $120,000 and Family B an income of $55,000.What is the tax bill of each?

Accepted Answer

For Family A with $120,000 income: $0 for the first $10,000; 10% of $20,000 = $2,000; 20% of $20,000 = $4,000; 30% of $20,000 = $6,000; 40% of $50,000 ($120,000 - $70,000) = $20,000. Total tax = $2,000 + $4,000 + $6,000 + $20,000 = $32,000. For Family B with $55,000 income: $0 for the first $10,000; 10% of $20,000 = $2,000; 20% of $20,000 = $4,000; 30% of $5,000 ($55,000 - $50,000) = $1,500. Total tax = $2,000 + $4,000 + $1,500 = $7,500.

Question 17

Rational ignorance is relevant for decision-making

Accepted Answer

Rational ignorance refers to the decision to remain uninformed about a topic because the cost of gathering information outweighs the potential benefit. This can occur in both the public and private sectors, as individuals may choose not to educate themselves on issues such as politics or financial investments. Therefore, choice B is the best answer. Choices A, C, and D are incorrect because they are too narrow in their scope and do not encompass the full range of decision-making situations where rational ignorance may be relevant.

Question 18

An example of a transfer in kind is

Accepted Answer

Subsidized public housing is an example of a transfer in kind because it involves the government directly providing a good or service (housing) to individuals in need, rather than giving them cash or vouchers to purchase housing on their own. National defense, Social Security, and employment benefits are all examples of cash transfers.

Question 19

The economic functions of government differ from the political functions of government in that

Accepted Answer

The economic functions of government involve policies and regulations that affect trade, commerce, and the market economy, while the political functions involve policies that govern the distribution of power, decision-making processes, and public services. Income redistribution is a political function as it involves the allocation of resources and benefits to different groups in society, whereas things like tariffs, subsidies, and regulations are economic functions as they affect the flow of goods and services in the economy. The level of government responsible for carrying out these functions may vary depending on the country or jurisdiction, but the distinction between economic and political functions remains the same.

Question 20

Suppose the tax rate on the first $10,000 of income is zero;10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on income over $70,000.Family C has an income of $100,000.The family's income tax bill will be $________.

Accepted Answer