Redistribution through the public sector tends to lower economic prosperity because
a. it weakens the link between productive activity and the reward derived from it.
b. it encourages resources to flow into wasteful rent-seeking activities.
c. the higher tax rates required to finance redistribution result in resources being devoted toward tax avoidance activities.
d. all of the above are true.
D
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Starting from a balanced budget, which of the following would NOT cause a deficit?
A) A decrease in taxes B) An increase in spending of goods and services C) An increase in transfer payments D) A 50 percent increase in spending accompanied by a 40 percent increase in taxes E) None of the above.
Regulation that is based on allowing prices to reflect only the actual operating cost of production is known as
A) average cost regulation. B) marginal cost regulation. C) rate-of-return regulation. D) cost-of-service regulation.
A firm's ______ connects all the input combinations with the same price.
A. cost function B. isoquant C. budget constraint D. isocost line
Despite its status as one of the richest countries in the world, Japan
a. has a very low level of productivity. b. has few natural resources. c. has very little human capital. d. engages in a relatively small amount of international trade.