Briefly describe the role of government in the economy. How are these government activities financed?
What will be an ideal response?
Government produces certain goods and services such as national defense or police protection. Government also regulates the economy through laws. Government redistributes income through taxes and expenditures. Government activity in the economy is financed through taxes, borrowing, and receiving proprietary income from government owned-enterprises.
You might also like to view...
Suppose George withdraws $60,000 from his bank. If the reserve ratio is 25 percent, then this transaction will lead to a decrease of ________ in checking account balances
A) $15,000 B) $45,000 C) $90,000 D) $180,000
When a buyer does not observe the quality, based on the following table, what is the highest price she will offer for a used car if she ignores adverse selection?Types of CarsBuyer's ValuationSeller's ValuationGood (50% probability)10,0009,500Bad (50% probability)5,0004,500
A. $10,000 B. $7,500 C. $7,000 D. $5,000
Kevin's Golf-a-Rama sells golf balls in a perfectly competitive market. At its current level of golf ball production, Kevin has marginal costs equal to $2. If the market price of golf balls is $1, Kevin should:
A. decrease the level of golf ball production. B. continue producing the current level of production. C. increase the production of golf balls. D. raise the price of its golf balls.
Refer to the data. Suppose government has already produced 4 units of this public good. The amount individual B is willing voluntarily to pay for the 4 th unit is:
Answer the question on the basis of the following information for a public good. P a and P b are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society.
A. $14.
B. $5.
C. $2.
D. $0.