With respect to income redistribution programs, what is meant by "The Big Tradeoff," and what causes it?
What will be an ideal response?
The big tradeoff refers to the tradeoff between equity and efficiency. A dollar collected from a rich person passes through a "leaky bucket" before getting to a poor person. The poor person doesn't receive all of that dollar. The cost of administering the program takes some of that money. More importantly, redistribution creates a disincentive to work, which decreases efficiency.
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When the Blue Ocean Surfboard Company lowered the price of surfboards by 20%, it sold 10% more surfboards. The price elasticity of demand for surfboards is: a. 2
b. 1/2. c. 1. d. 20.
If inflation in the United States averages more than inflation in the euro area over a long period of time, we should expect:
A. the dollar to depreciate relative to the euro. B. the dollar to appreciate relative to the euro. C. the euro/U.S. dollar exchange rate to fluctuate in a narrow range set by the European Central Bank. D. no effect; there isn't a link between inflation and exchange rates over the long run.
The relationship between the number of hours a student studies for an exam and the exam grade is most likely graphed as
A. a line sloping up from lower right to upper left. B. a line sloping up from lower left to upper right. C. a horizontal or flat line. D. a line sloping down from upper left to lower right.
You put money into an account and earn an after-tax real interest rate of 2.5 percent. If the nominal interest rate on the account is 8 percent and the inflation rate is 2 percent, then what is the tax rate?
a. 28.00 percent b. 36.25 percent c. 43.75 percent d. 67.50 percent