Consider voter preferences over a public good y that is being funded by a proportional income tax.
a. Illustrate how this might lead to single peaked voter preferences.
b. Suppose there exists a privately available good x that is substitute for y. How does this introduce non-single peakedness?
c. Now suppose x is relatively complementary to y. What would you expect to happen to voter preferences as this complementarity gets stronger?
What will be an ideal response?
a. This is discussed in Graph 28.1 of the text.
b. This is discussed in Graph 28.3 of the text.
c. The more complementary x is to y, the less likely it is that preferences will be non-single peaked.
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The additional goods and services produced by women in the United States as their labor force participation increases represent:
A. no change in economic activity, B. an increase in economic activity. C. a decrease in economic activity. D. a switch from market to non-market production.
Today the primary distinction between direct and indirect finance is in:
A. direct finance the asset holder has a claim on a financial institution while in indirect finance the asset holder has a direct claim on the borrower. B. indirect finance the asset holder has a claim on the government while in direct finance the asset holder has a direct claim on a private sector corporation. C. indirect finance the lender has a direct claim on the borrower while in direct finance the lender has a claim on a financial institution. D. direct finance the asset holder has a direct claim on the borrower while in indirect finance the asset holder has a claim on a financial institution.
The hypothesis that changes in the money supply lead to an equiproportional change in the price level is called
A. the classical theory of money. B. the quantity theory of money. C. the Keynesian theory of money. D. the fractional theory of money.
What is TRUE of the price elasticity of demand faced by a monopoly firm?
A. Demand is perfectly elastic because the monopolist has no competition. B. Demand is more elastic at lower prices and more inelastic at higher prices. C. Demand is inelastic. D. Demand becomes more elastic as the range of imperfect substitutes expands.