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ECO 450 Week 1 DQ 1 The Basics
“The Basics” Please respond to the following:

Analyze the relationship between the production possibilities curve and the circular
flow diagram. Discuss how the change of production possibilities curve affects the
circular flow diagram. Provide an example to support your response.
ECO 450 Week 1 DQ 2 Government
Expenditures
Government Expenditures” Please respond to the following:

Suppose the federal government balanced the budget and no longer ran a deficit.
Speculate how this would affect interest on the federal debt. Justify your response.
ECO 450 Week 2 DQ 1 Markets and
Efficiency
Markets and Efficiency” Please respond to the following:
Analyze how taxes and subsidies impact market efficiency. Speculate if market efficiency
would be increased or decreased without issues of taxes and subsidies. Justify your
response.
ECO 450 Week 2 DQ 2 Externalities
Externalities” Please respond to the following:

Assess the impact of transaction costs as they apply to the Coase Theorem. Evaluate
how government assignment of property rights impacts free market exchanges.
ECO 450 Week 2 Quiz
Question 1
About 80 percent of federal receipts are accounted for by:
Question 2
Transfer payments by the federal government in the United States account for about:
Question 3
Following the circular flow of a mixed economy, firms receive a flow of dollars from and send
goods and services to:
Question 4
In 2008, which country listed below has the highest percentage of government spending relative
to GDP?
Question 5
Government purchases for consumption and investment:
Question 6
Government goods and services are usually:
Question 7
Following the circular flow of a mixed economy, which entity or entities distribute resources?
Question 8
State and local government expenditure in the United States accounts for about:
Question 9
A mixed economy is one in which:
Question 10
Total annual expenditures by federal, state, and local governments in the United States in the
1990s accounted for roughly:
Question 11
The real cost of government goods and services is:
Question 12
If the economy is currently operating on a point on the production possibility curve for
government goods and services versus private goods and services,
Question 13
Taxes:
Question 14
The old-age dependency ratio is:
Question 15
Federal government expenditures in the United States account for about:
ECO 450 Week 3 DQ 1 Public versus Private
Goods
Public versus Private Goods” Please respond to the following:

Compare and contrast the demand curve for public goods and the demand curve for
a private good. Evaluate the impact of the current trend toward the expansion of
government services.
ECO 450 Week 3 DQ 2 The Political Process
The Political Process” Please respond to the following:

Explain the role that political parties play in political equilibrium. Identify if more
parties mean a better equilibrium. Justify your response.
ECO 450 Week 3 Quiz
Question 1
Which of the following is a normative statement?
Question 2
If a government desires to increase production beyond the current competitively determined
efficient level, the government should:
Question 3
If the efficient output of a good is produced each week, then the:
Question 4
Normative economics:
Question 5
Diamonds are sold by a monopoly firm that maximizes profits. Then it follows that:
Question 6
The marginal social cost of bread exceeds the marginal social benefit at the current weekly
output. Therefore,
Question 7
An efficient level of output means:
Question 8
Positive economics is:
Question 9
Suppose the efficient output currently prevails in the market for ice cream. A tax on ice cream
consumption will:
Question 10
The extra benefit on one more unit of a good or service is its:
Question 11
The total social benefit of automobiles equals the total social cost at current annual output. Then
it follows that:
Question 12
Positive economics:
Question 13
Normative economics is:
Question 14
A move from an inefficient resource allocation to an efficient one:
Question 15
If efficiency has been attained,
Question 16
Assuming a product can be manufactured competitively without any externalities at an efficient
quantity of 1,000 units and an efficient price of $100.00 per unit, what efficient quantity-price
combination would be consistent with a negative externality?
Question 17
Electric power is produced by an unregulated monopoly in a certain region. The monopolistic
electric power company’s production of electricity results in $10 per kilowatt hour of pollution
damage to parties other than the buyers of electricity in the region. To achieve efficiency,
Question 18
If the marginal costs of reducing emissions varies among regions, then regulations requiring all
regions in a nation to reduce emissions by the same amount will achieve:
Question 19
The effect of a positive externality is similar to:
Question 20
The marginal external cost associated with paper production is constant at $10 per ton per year.
The competitive market equilibrium for paper production is currently 10 million tons per year. A
corrective tax on paper production:
Question 21
The current competitive market price of fish is $3 per pound. A chemical producer emits effluent
into a lake used by a commercial fishing firm. Each ton of chemical output causes a 20-pound
reduction in the annual catch of the fishing firm. Assuming that transactions costs are zero and
the chemical firm has the legal right to dump effluent into the lake,
Question 22
The effect of a negative externality is similar to:
Question 23
The marginal external cost associated with air pollution increases with the annual output of a
polluting industry. At the current competitive equilibrium level of output per year, the marginal
external cost is $10 per unit of output. To achieve efficiency,
Question 24
If a positive externality prevails in the market for smoke detectors, then when the market is in
equilibrium,
Question 25
The competitive market equilibrium price of sanitation services in a small town with no
government-supplied sanitation services is $2 per trash pickup. There is a $1 marginal external
benefit associated with each trash pickup. The elasticity of supply of trash pickups is infinite in
the long run, implying a horizontal supply curve. To achieve the efficient output of sanitation
services,
Question 26
Regulations require that emissions of carbon monoxide be limited to 1,000 tons per 100 square
miles for all regions of the nation. If the marginal external cost of the emissions varies among
regions in the nation, then the regulations will:
Question 27
According to the Coase theorem, externalities can be internalized when transactions costs are
zero through:
Question 28
Assuming a product can be manufactured competitively without any externalities at an efficient
quantity of 500 units and an efficient price of $150.00 per unit, what efficient quantity-price net
subsidy combination would be consistent with a corrective subsidy for a positive externality?
Question 29
A negative externality results from the sale of firewood in competitive markets. Then it follows
that:
Question 30
Which of the following is true about command-and-control regulation that allows businesses to
emit pollutants up to a certain point and bans emissions after that limit is reached?
ECO 450 Week 4 Assignment 1 Social
Security Insolvency
ECO 450 Week 4 DQ 1 Cost Benefit Analysis
Cost-Benefit Analysis” Please respond to the following:



Compare and contrast cost-benefit analysis conducted by a government agency and
a feasibility study conducted by a private firm.
From the first e-Activity, evaluate the profitability of constructing a sports stadium
in a major city, and speculate how your analysis would change if it involved an art
museum or a casino.
When conducting a cost-benefit analysis, explain how we determine the social
discount rate. Specify three of the most important factors to consider in order to
achieve an accurate cost-benefit analysis.
ECO 450 Week 4 DQ 2 Government
Assistance Programs
Government Assistance Programs” Please respond to the following:


From the second e-Activity, explain the concept of the Temporary Assistance to
Needy Families (TANF) program, identify its effectiveness in implementing the
Personal Responsibility and Work Opportunity Act of 1996, and suggest measures
to improve the effectiveness of TANF.
Compare and contrast wage rate subsidies and transfer programs. Identify the
relative merits and issues with each type of assistance.
ECO 450 Week 4 Quiz
Question 1
Which of the following is a good example of a congestible public good?
Question 2
A baseball field is:
Question 3
A means of creating a price-excludable public good is:
Question 4
An example of an undesirable public good (or public “bad”) is:
Question 6
The marginal cost of making a given quantity of a congestible public good available to more
consumers is:
Question 7
Public transportation is:
Question 8
The efficient output of a pure public good is achieved at the point at which:
Question 9
The demand curve for a pure public good is:
Question 10
The nonrival property of pure public goods implies that the:
Question 11
The principle of nonexclusion for pure public goods means that the benefits of the good:
Question 12
The free-rider problem:
Question 13
Cable TV programming is an example of a:
Question 14
The marginal cost of providing a certain quantity of a pure public good to an additional
consumer after it is provided to any one consumer is:
Question 15
The monthly rental rate for a satellite dish antenna is $200. The maximum marginal benefit that
any resident of a condominium community will obtain per month from the antenna is $50. There
are 100 residents in the community, none of whom values the antenna at less than $25 per
month. Assuming that the antenna is a pure public good for residents of the community,
Question 16
If a person has multiple-peaked preferences for a pure public good,
Question 17
A community currently hires 10 security guards per week to patrol their neighborhood. Each
security guard costs $300 per week. Assuming that the tax-sharing arrangement agreed to results
in each of 300 voters paying the same tax share, each voter pays a weekly tax bill of:
Question 18
If all voters have single-peaked preferences for a pure public good, then the political equilibrium
under majority rule:
Question 19
A voter’s most-preferred political outcome will be that for which the:
Question 20
A proposal to build new roads in a small town is up for a vote. Voter B estimates that his
marginal benefit of roads at the proposed new level would be $80 per year. This voter will vote
against the proposal:
Question 21
A small community currently taxes residents to provide monthly community concerts. Voter A
currently pays a tax per concert equal to $50 per month. This voter receives a marginal benefit of
$75 at the current political equilibrium number of concerts per month. Voter A:
Question 22
Implicit logrolling results when:
Question 23
Arrow’s impossibility theorem states:
Question 24
Which of the following collective choice rules is likely to incur the highest political transactions
costs?
Question 25
If the marginal social benefit of one more unit of a good is 10 and the marginal social cost of one
more unit of a good is 11, then:
Question 26
Which of the following collective choice rules is likely to have the lowest political externalities?
Question 27
The demand curve for a pure public good is:
Question 28
Voter A will normally vote in favor of one security guard per week because his marginal benefit
is $125 and his tax share is $100 per week. Voter A receives zero marginal benefit from one
concert a week and would vote against it. Voter B receives $125 marginal benefit from one
concert per week but no marginal benefit from one security guard. One concert per week also
will fail to gain a majority when put to the vote. Assuming that both Voter A and Voter B will
pay $100 per week in tax for each concert and each security guard,
Question 29
The plurality rule is:
Question 30
A public choice is:
ECO 450 Week 5 DQ 1 Retirement and the
Social Security System
Retirement and the Social Security System” Please respond to the following:


It is claimed that many pensions are underfunded. Investigate this issue and suggest
a resolution(s) to the problem. Cite your sources in your answer.
Take a position on whether or not reducing unemployment benefits from the 99
week maximum. Justify your response.
ECO 450 Week 5 DQ 2 The U.S. Health Care
Dilemma
The U.S. Health Care Dilemma” Please respond to the following:



Evaluate the third-party payment system and its effect on the consumption and
provision of health care services. Determine the most problematic area and make
the relative improvements.
Identify the measures used by state government to control Medicaid costs, analyze
their effectiveness, and suggest strategy to improve their effectiveness.
Evaluate the third-party payment system and its effect on the consumption and
provision of health care services. Determine the most problematic area and make
the relative improvements.
ECO 450 Week 5 Mid Term
Question 1:
If the economy is operating at full employment and using resources efficiently, then an increase
in spending for homeland security this year will:
Question 2
Following the circular flow of a mixed economy, firms receive a flow of dollars from and send
goods and services to:
Question 3
In 2008, which country listed below has the highest percentage of government spending relative
to GDP?
Question 4
Federal government expenditures in the United States account for about:
Question 5
A mixed economy is one in which:
Question 6
The extra benefit on one more unit of a good or service is its:
Question 7
Normative economics is:
Question 8
Diamonds are sold by a monopoly firm that maximizes profits. Then it follows that:
Question 9
Positive economics:
Question 10
If the efficient output of a good is produced each week, then the
Question 11
The current competitive market price of fish is $3 per pound. A chemical producer emits effluent
into a lake used by a commercial fishing firm. Each ton of chemical output causes a 20-pound
reduction in the annual catch of the fishing firm. Assuming that transactions costs are zero and
the chemical firm has the legal right to dump effluent into the lake,
Question 12
Assuming a product can be manufactured competitively without any externalities at an efficient
quantity of 500 units and an efficient price of $150.00 per unit, what efficient quantity-price net
subsidy combination would be consistent with a corrective subsidy for a positive externality?
Question 13
If a positive externality prevails in the market for smoke detectors, then when the market is in
equilibrium,
Question 14
The competitive market equilibrium price of sanitation services in a small town with no
government-supplied sanitation services is $2 per trash pickup. There is a $1 marginal external
benefit associated with each trash pickup. The elasticity of supply of trash pickups is infinite in
the long run, implying a horizontal supply curve. To achieve the efficient output of sanitation
services,
Question 15
According to the Coase theorem, externalities can be internalized when transactions costs are
zero through:
Question 16
Education is:
Question 17
Cable TV programming is an example of a:
Question 18
The marginal cost of making a given quantity of a congestible public good available to more
consumers is:
Question 19
Public transportation is:
Question 20
The principle of nonexclusion for pure public goods means that the benefits of the good:
Question 21
The plurality rule is:
Question 22
A public choice is:
Question 23
A community currently hires 10 security guards per week to patrol their neighborhood. Each
security guard costs $300 per week. Assuming that the tax-sharing arrangement agreed to results
in each of 300 voters paying the same tax share, each voter pays a weekly tax bill of:
Question 24
Which of the following collective choice rules is likely to incur the highest political transactions
costs?
Question 25
If the marginal social benefit of one more unit of a good is 10 and the marginal social cost of one
more unit of a good is 11, then:
Question 26
Program budgeting is a way to:
Question 27
A government agency has a new hydroelectric project that will take 15 years to build before it
provides any benefits. The net present value of the project will be highest under which of the
following discount rates?
Question 28
The process of taking a previous period’s budget and making minor changes to produce the
current year’s budget is called:
Question 29
If the social rate of discount falls, then the efficient amount of government capital spending will:
Question 30
The mission of a government agency is:
Question 31
A welfare recipient receives a cash transfer of $100 per week. This grant is not reduced if the
recipient earns less than $20 per week. However, after the recipient earns more than $20 per
week, the grant is reduced by 66 cents for each dollar of earnings. The cash transfer will be
reduced to zero if the recipient earns:
Question 32
Government transfers to the poor in the United States:
Question 33
Temporary Assistance to Needy Families (TANF) replaced:
Question 34
In the United Stated, which of the following years had the highest poverty rate?
Question 35
The Supplemental Nutrition Assistance (formerly called food stamps):
ECO 450 Week 6 DQ 1 Taxation and
Government Finance
Taxation and Government Finance” Please respond to the following:

Discuss the purposes and consequences of government finance. Analyze the role and
the importance of government finance in economy growth.
ECO 450 Week 6 DQ 2 Evaluating
Alternative Methods to Finance Government
Evaluating Alternative Methods to Finance Government” Please respond to the following:


Choose three of the most effective alternative methods of government finance.
Provide a rationale for your choices by explaining why they are the most effective
methods, and analyze their impact on the economy.
Analyze the various means of taxation available to finance the government and
evaluate the alternatives to taxes. Identify if there is an economic limit to the extent
to which the government can increase taxes. Justify your response.
ECO 450 Week 6 Quiz
Question 1
The Social Security retirement system:
Question 2
A retiree subject to the earnings test under Social Security:
Question 3
A worker earns $2,000 per month before taxes. He pays $140 per month payroll tax on those
wages. In addition, the income taxes on those wages are $360 per month. On retirement, the
worker receives a Social Security pension of $750 per month. Which of the following statements
is true?
Question 4
Unless legislation is introduced to change the normal retirement age, people born in 1960 or later
will be able to retire with full Social Security benefits at age:
Question 5
Which of the following can decrease tax rates necessary to pay pensions for a pay-as-you-go
pension system?
Question 6
A nation has 40 million current retirees and a work force of 100 million. Which of the following
is true?
Question 7
The gross replacement rate:
Question 8
A pay-as-you-go social security retirement system is:
Question 9
Social Security tax rates can be reduced if:
Question 10
The asset-substitution effect of the Social Security retirement system leads all workers to:
Question 11
Which of the following is a consequence of a growing federal budget deficit in the United
States?
Question 12
Given the structure and level of gross replacement rates and the expected future growth of labor
earnings subject to the payroll tax, the tax rates used to tax payrolls were increased in the 1980s
because:
Question 13
The induced-retirement effect of the Social Security pension system induces workers to:
Question 14
Unemployment insurance benefits are:
Question 15
The Social Security Act was implemented in the United States in:
Question 16
Which of the following is an example of the “moral hazard of health insurance”?
Question 17
Which of the following subsidizes private provision of health insurance?
Question 18
In the United States, individuals pay approximately what percent of the cost of their medical care
directly to providers?
Question 19
Since 1960, expenditures on health care as a percent of GDP has:
Question 20
The percent of total health care costs in the United States paid for by governments is
approximately:
Question 21
Which of the following programs accounts for the greatest amount of government expenditures
on public health in the United States?
Question 22
The government program that provides the health insurance to the poor in the United States is
called:
Question 23
Which of the following is true about the Medicaid program in the United States?
Question 24
Most of the medical bills of Americans in the United States are paid by:
Question 25
What would be the effect of having no health insurance available?
Question 26
The elderly are what proportion of beneficiaries of Medicare?
Question 27
If the quantity of healthcare is more than the efficient quantity, what is the consequence?
Question 28
Which of the following could help decrease the rate of increase of spending on health care in the
United States?
Question 29
What is the moral hazard associated with third party payment for health services?
Question 30
The system of third-party payment for medical care in the United States has which of the
following effects in the market for health care?
ECO 450 Week 7 DQ 1 Taxation and Income
“Taxation and Income” Please respond to the following:

Explain when and why the lump-sum tax is used as a benchmark. Evaluate the
effectiveness of using the lump-sum tax as a benchmark and suggest strategy to
improve the effectiveness.

Analyze the impact of taxation on prices and market efficiency. Identify instance(s)
where higher taxes do not reduce the consumption of a good. Provide an example to
support your response.
ECO 450 Week 7 DQ 2 The National Debt
“The National Debt” Please respond to the following:


Analyze how budget surpluses and deficits impact national saving, interest rates,
and economic growth. Take a position on whether the government should maintain
a budget surplus or budget deficit. Justify your response.
Explain the impact of the debt burden on future generations and give your opinion
as to what the government should do to reduce the budget deficit.
ECO 450 Week 7 Quiz
Question 1
According to the benefit principle,
Question 2
If the marginal tax rate is 20% under a proportional tax rate structure, the average tax rate:
Question 3
If the average tax rate under a progressive tax rate structure is 35%, a possible marginal tax rate
is:
Question 4
A payroll tax taxes a worker’s wages at 14 percent until the worker earns $60,000 per year. All
labor earnings in excess of $60,000 are not subject to tax. The tax rate structure of the payroll tax
is therefore:
Question 5
The marginal tax rate will eventually exceed the average tax rate for
Question 6
Which of the following countries has the highest average tax rate relative to GDP?
Question 7
Tax avoidance is:
Question 8
Marginal tax rates were reduced in 2001. Other things being equal, this is likely to:
Question 9
An excise tax is a:
Question 10
A tax on the value of real estate holdings is a:
Question 11
A 5-percent retail sales tax on all consumer purchases in a state is imposed. The sales tax is:
Question 12
A proportional income tax has an average tax rate that:
Question 13
The tax base of a payroll tax is:
Question 14
A bridge becomes congested after 100 vehicles per hour use it on any day. To achieve efficiency,
a toll
ECO 450 Week 8 DQ 1 The U.S. Tax System
The U.S. Tax System” Please respond to the following:


From the e-Activity, analyze the economic effects of a flat-rate tax on the U.S.
economy. Identify how a flat-rate tax affects government activities. Cite your
sources in your answer.
Explain how taxation impacts the labor market. In your explanation, include a
discussion of the impact on savings and investment, and how these impacts are
related to the impacts on the labor market. Provide an example to support your
response.
ECO 450 Week 8 DQ 2 Personal Income Tax
Personal Income Tax” Please respond to the following:


From the second e-Activity, analyze the impact of the expiration of the Bush tax cuts
on personal income tax rates. Take a position on whether the Bush tax cuts be
extended on a temporary or permanent basis for individuals. Provide a rationale for
your answer
Analyze the progressive nature of the U.S. federal income tax rate structure.
Explain the political philosophy that drives a progressive tax rate structure. Identify
how this supports or contradicts the existence of state-run lotteries.
ECO 450 Week 8 Quiz
Question 1
Housing construction is generally believed to be an industry of constant costs. In the long run,
which of the following is true if a $10 per square foot tax on housing construction is collected
directly
from builders?
Question 2
Which of the following is true about a lump-sum tax?
Question 3
The demand for medical care is very inelastic. If a 10-percent tax is levied on the sale of medical
services and is collected from medical-care providers, then:
Question 4
Currently, a 10-cent per gallon tax is levied on gasoline consumption. The tax is increased to 20
cents per gallon. The excess burden of the tax will:
Question 5
Suppose an economy is comprised of only two markets: one for food and the other for housing.
A tax on food used to finance transfer payments is likely to:
Question 6
A $0.30 per unit tax is imposed on a good that reduces the quantity supplied and demanded by
1000 units. What is the deadweight loss (ignore price elasticities)?
Question 7
The efficiency-loss ratio relative to tax is:
Question 8
The current price of compact discs, which are traded in perfectly competitive markets, is $10. A
$1 per unit tax is levied on the discs. Annual record sales decline from five million to four
million as a result of the tax. Assuming that the income effect of the tax-induced price change is
negligible, the excess burden of the tax will be:
Question 9
If a lump-sum tax is imposed, the slope of the new budget line relative to the budget line prior to
the tax:
Question 10
If the price elasticity of supply of labor is equal to 0.5 and the price elasticity of demand for
labor is –2, then which of the following is likely to result from a tax on labor earnings?
Question 11
A lump-sum tax:
Question 12
Other things being equal, the more inelastic the demand for a taxed good,
Question 13
Differential tax incidence measures the effect:
Question 14
Most studies of tax incidence assume that taxes on labor income and other input services are
borne entirely by the workers and other input owners that supply the services. This implies that
the:
Question 15
Viewed from origin a price distorting tax creates a new budget line with a ______ slope relative
to the budget line without the tax.
Question 16
Which of the following can contribute to a decrease in national saving?
Question 17
The total dollar value of the federal debt outstanding is:
Question 18
A government’s internal debt is:
Question 19
Other things being equal, a government budget surplus:
Question 20
The largest portion of the net federal debt outstanding is owed to:
Question 21
Which of the following is true about the federal government budget balance in the United States?
Question 22
The federal budget has been in deficit:
Question 23
As a result of government borrowing to cover deficits, citizens increase the supply of savings to
provide themselves with funds to pay anticipated increases in future taxes. Then it follows that
increased government borrowing will:
Question 24
The high employment deficit is estimated at $100 billion. Assuming that the economy is
operating below full employment and that it will not overheat during the year,
Question 25
High-employment deficit or surplus is:
Question 26
The National Income and Product Accounts budget balance reflects:
Question 27
A bond that is backed by the tolls collected from a bridge to be constructed from the proceeds of
the bond is an example of:
Question 28
The debt of state and local governments is mostly:
Question 29
Evidence of “crowding out” in the market for loanable funds at a rate of 8% could be:
Question 30
The federal government, its agencies, and the Federal Reserve System:
ECO 450 Week 9 DQ 1 Corporate Income
Tax
Corporate Income Tax” Please respond to the following:


Analyze the short-run and long-run impact of taxation on output, income, and the
allocation of resources. Speculate the most problematic area of the taxation and
suggest strategy to improve it.
Explain the concept of tax incidence. Analyze how tax incidence affects economic
activity. Provide an example to support your answer.
ECO 450 Week 9 DQ 2 Taxation on
Consumption and Sales
Taxation on Consumption and Sales” Please respond to the following:


Compare and contrast the following types of taxes: sales, excise, turnover, and
value-added. Choose the one type that affects economy the most. Provide a rationale
for your answer.
Compare and contrast consumption tax and income tax. Analyze the effects of each
on the economy.
ECO 450 Week 9 Quiz
Question 1
A tax on interest income:
Question 2
Which of the following is true about comprehensive income?
Question 3
If the market supply curve of savings is upward sloping, a tax on interest income will:
Question 4
Most empirical research indicates that the market supply curve of labor hours by prime-age
males is:
Question 5
The Haig-Simons definition of income:
Question 6
Using a regular labor supply curve instead of a compensated supply curve to calculate the excess
burden of a tax on labor income will:
Question 7
If the return to savings, r, is subject to taxation at rate t, then in equilibrium a saver’s marginal
rate of time preference will equal:
Question 8
The compensated labor supply curve:
Question 9
A flat-rate tax on labor income will:
Question 10
Comprehensive income:
Question 11
Income from labor services (wages) account for what percentage of gross income in the U.S.?
Question 12
Comprehensive income:
Question 13
If the supply of labor is perfectly inelastic, then the incidence of a payroll tax levied entirely on
employers will be:
Question 14
The higher the compensated elasticity of supply of savings,
Question 15
Which of the following will increase a person’s comprehensive income?
Question 16
A taxpayer is in a 33-percent tax bracket and itemizes deductions. He obtains a mortgage from a
bank at 9-percent interest. The actual rate of interest he pays is:
Question 17
Tax preferences:
Question 18
If the excess burden from tax is $10 million, lowering marginal tax rates should make the excess
burden:
Question 19
Tax expenditures are:
Question 20
Adjusted gross income, as defined by the United States Tax Code,
Question 21
“Bracket creep” is no longer a problem in the United States because:
Question 22
The excess burden of tax preferences:
Question 23
Which of the following is true for the federal income tax in the United States?
Question 24
Removing savings from the tax base of the personal income tax is likely to:
Question 25
Because of the Earned Income Tax Credit, the effective tax rate for the lowest-income taxpayers
in the United States is:
Question 26
Currently, the tax treatment of capital gains in the United States is such that:
Question 27
The reduction in marginal tax rates will:
Question 28
As of 2009, the highest marginal tax rate is:
Question 29
The exclusion of interest of state and local bonds from taxation by the federal government:
Question 30
Under the federal personal income tax rules prevailing as of 2009,
ECO 450 Week 10 DQ 1 Wealth and Taxation
Wealth and Taxation Please respond to the following:


Compare and contrast a wealth tax and an income tax. Evaluate how the differences
between these two taxes might impact individual behavior.
Compare and contrast the following: property taxes, land taxes, and property
transfer taxes. Choose the one type that impacts individual life the most. Provide an
example to support your choice.
ECO 450 Week 10 DQ 2 Government
Finance
Government Finance Please respond to the following:


Compare and contrast a centralized versus a decentralized government. Include a
discussion of the Tiebout Model.
Explain the concept of fiscal federalism. Identify the most important part in its
subject matter, and analyze its impact on the economy.
ECO 450 Week 10 Quiz
Question 1
According to the Harberger model of the incidence of the corporate income tax, the tax:
Question 2
Under the corporation income tax in the United States,
Question 3
Accelerated depreciation allows corporations to:
Question 4
If corporations maximize profits, the short-run incidence of a tax on its profits will be borne by:
Question 5
The tax base for the corporate income tax in the United States is:
Question 6
The double taxation of dividends under U.S. tax code means:
Question 7
If an all-equity firm has after-tax income of $100,000 based on a 34% income tax, what is the
after-tax income of an equivalent firm that pays $15,000 in interest that is tax deductible?
Question 8
If interest on corporate debt is tax deductible, a firm’s return on equity increases because:
Question 9
Assuming that the supply of savings is perfectly inelastic, the corporate income tax prevents the
attainment of efficiency by:
Question 10
If the supply of savings is not perfectly elastic, the corporate income tax is likely to:
Question 11
In the long run a corporate income tax that initially reduces the return to investment in the corporate sector will also:
Question 12
If corporations maximize profit, a corporate income tax:
Question 13
Assuming that corporations maximize profits and investors seek to maximize the return to their
investments, the long-run impact of a corporate income tax is to:
Question 14
The effective tax rate is:
Question 15
Which of the following is true about the economic effects of the corporate income tax?
Question 16
In most states, the retail sales tax can be regarded as equivalent to a:
Question 17
The differential incidence of substituting a tax on comprehensive consumption for a tax on
comprehensive income is likely to be:
Question 18
Suppose two individuals earn the same salary each year over their lifetimes. One individual
saves 25 percent of his income each year, while the other saves nothing. Over their lifetimes
under a comprehensive income tax,
Question 19
The value-added tax used in the European Union:
Question 20
Consumption-in-kind:
Question 21
As administered in most states in the United States, the retail sales tax:
Question 22
Comprehensive consumption is:
Question 23
A flat-rate tax on comprehensive consumption:
Question 24
Which of the following taxes is likely to be most favorable for capital accumulation?
Question 25
The invoice method of collecting the value-added tax:
Question 26
Which of the following statements about taxes on consumption are true?
Question 27
A consumption-type, value-added tax:
Question 28
An adult’s life cycle is considered to begin:
Question 29
Assuming that a person never receives any cash gifts or bequests, a tax on comprehensive consumption is equivalent to a(n):
Question 30
A tax on comprehensive consumption
ECO 450 Week 11 DQ 1 Government Policies
on Health Care and Taxation
Government Policies on Health Care and Taxation Please respond to the following:


From the e-Activity, compare and contrast the opposing viewpoints regarding the
current administration policies in the areas of health care and taxation. Explain the
impact these policies will have on you and your family. Cite your sources in your
answer.
Which of the possible policies for restraining the growth of medicare expenditures
would be the most successful in your opinion?
ECO 450 Week 11 DQ 2 Public Finance and
You
Public Finance and You Please respond to the following:


Analyze the economic effects of government deficit spending on debt, economic
growth, and consumer interest rates. Discuss the effect current deficit spending has
on your future income.
Identify three major concepts that you have learned during this course and evaluate
their importance to your personal career, investing, and savings philosophies.
ECO 450 Week 11 Final Exam Part 1
Question 1
A worker earns $2,000 per month before taxes. He pays $140 per month payroll tax on those
wages. In addition, the income taxes on those wages are $360 per month. On retirement, the
worker receives a Social Security pension of $750 per month. Which of the following statements
is true?
Question 2
The Social Security Act was implemented in the United States in:
Question 3
The gross replacement rate:
Question 4
Social Security tax rates can be reduced if:
Question 5
The Social Security retirement system:
Question 6
The induced-retirement effect of the Social Security pension system induces workers to:
Question 7
Which of the following is true about the Medicare program in the United States?
Question 8
The percent of total health care costs in the United States paid for by governments is
approximately:
Question 9
The government program that provides the health insurance to the poor in the United States is
called:
Question 10
Under national health insurance as operated in Great Britain,
Question 11
Most of the medical bills of Americans in the United States are paid by:
Question 12
What is the moral hazard associated with third party payment for health services?
Question 13
A proportional income tax has an average tax rate that:
Question 14
A tax on real estate is a:
Question 15
If the average tax rate under a progressive tax rate structure is 35%, a possible marginal tax rate
is:
Question 16
A 5-percent retail sales tax on all consumer purchases in a state is imposed. The sales tax is:
Question 17
Taxes:
Question 18
Which of the following countries has the highest average tax rate relative to GDP?
Question 19
The efficiency-loss ratio relative to tax is:
Question 20
If a lump-sum tax is imposed, the slope of the new budget line relative to the budget line prior to
the tax:
Question 21
Viewed from origin a price distorting tax creates a new budget line with a ______ slope relative
to the budget line without the tax.
Question 22
A $0.30 per unit tax is imposed on a good that reduces the quantity supplied and demanded by
1000 units. What is the deadweight loss (ignore price elasticities)?
Question 23
Other things being equal, the more inelastic the demand for a taxed good,
Question 24
The supply of new cars is perfectly elastic. A $400 per car tax is levied on buyers. As a result of
the tax,
Question 25
The federal government, its agencies, and the Federal Reserve System:
Question 26
The National Income and Product Accounts budget balance reflects:
Question 27
The total dollar value of the federal debt outstanding is:
Question 28
The debt of state and local governments is mostly:
Question 29
If the federal government runs a surplus consistently, then which of the following is likely to
occur?
Question 30
An increase in government borrowing has no effect on the willingness of citizens to save or on
the demand for credit. Increased borrowing to cover deficits will therefore:
ECO 450 Week 11 Final Exam Part 2
Question 1
Most empirical research indicates that the market supply curve of labor hours by prime-age
males is:
Question 2
The higher the compensated elasticity of supply of savings,
Question 3
If the return to savings, r, is subject to taxation at rate t, then in equilibrium a saver’s marginal
rate of time preference will equal:
Question 4
The Haig-Simons definition of income:
Question 5
Comprehensive income:
Question 6
Which of the following is the result of The Economic Growth and Tax Relief Reconciliation Act
enacted in 2001?
Question 7
The reduction in marginal tax rates will:
Question 8
Which of the following is true for the federal income tax in the United States?
Question 9
The excess burden of tax preferences:
Question 10
Tax expenditures are:
Question 11
Accelerated depreciation allows corporations to:
Question 12
In the long run a corporate income tax that initially reduces the return to investment in the corporate sector will also:
Question 13
If corporations maximize profits, the short-run incidence of a tax on its profits will be borne by:
Question 14
If an all-equity firm has after-tax income of $100,000 based on a 34% income tax, what is the
after-tax income of an equivalent firm that pays $15,000 in interest that is tax deductible?
Question 15
If the supply of savings is not perfectly elastic, the corporate income tax is likely to:
Question 16
Assuming that a person never receives any cash gifts or bequests, a tax on comprehensive consumption is equivalent to a(n):
Question 17
In most states, the retail sales tax can be regarded as equivalent to a:
Question 18
Consumption-in-kind:
Question 19
A consumption-type, value-added tax:
Question 20
The differential incidence of substituting a tax on comprehensive consumption for a tax on
comprehensive income is likely to be:
Question 21
If a tax on real estate results in a decrease in the supply of housing, the tax will be:
Question 22
A comprehensive wealth tax will:
Question 23
If the annual amount of savings is $10 billion, what is the effect of a wealth tax assuming supply
is responsive?
Question 24
If the annual amount of savings is $10 billion, what is the effect of a wealth tax assuming supply
is perfectly inelastic?
Question 25
A comprehensive wealth tax base includes:
Question 26
What is generally the best measure of fiscal capacity for local governments?
Question 27
In general, local tax bases tend to be:
Question 28
Under a federal system of government,
Question 29
A federal highway grant will provide funds for roads supplied by state and local governments if
these governments pay 50 percent of the cost of the roads. This grant is an example of:
Question 30
A grant received by a local government will:
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