Some politicians have recently suggested changing the income tax system in the U.S. to a flat tax system where all taxpayers would pay the same percentage of their income in tax to the federal government
Explain how such a change can be analyzed in terms of efficiency. Do you believe that this tax will have equity effects as well?
The flat tax will lower the cost of filing taxes for taxpayers and therefore increase the efficiency of government financing. However, this will place a larger tax burden on the poor than currently exists which may lead to some equity concerns.
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Nash equilibria are stable because
A) they involve dominant strategies. B) they involve constant-sum games. C) they occur in noncooperative games. D) once the strategies are chosen, no players have an incentive to negotiate jointly to change them. E) once the strategies are chosen, no player has an incentive to deviate unilaterally from them.
Smallville has experienced a fall in its birth rate over time. This will cause: a. the long-run aggregate supply curve to shift rightward
b. the long-run aggregate supply curve to shift leftward. c. an upward movement along the long-run aggregate supply curve. d. a downward movement along the long-run aggregate supply curve.
Crony capitalism is present when
a. businesses are either implicitly or explicitly prohibited from making donations to political candidates. b. businesses either implicitly or explicitly provide political decision-makers with contributions and other forms of political support in "exchange" for government favors that will improve their profitability. c. rule of law is present and government officials treat all citizens alike. d. government officials spend taxpayer funds only on productive projects.
Ryan spends an hour studying instead of going for a bike ride. Assume studying and bike riding were Ryan's only options for that hour. The opportunity cost to him of studying is Choose one answer.
a. the improvement in his grades from studying for the hour. b. the difference between the improvement in his grades and the enjoyment from bike riding. c. the enjoyment and exercise he would have received from bike riding. d. zero since neither activity required Ryan to spend any money. e. the value of the knowledge he gained by studying.