Which of the following best illustrates the free-rider problem?
a. A tollbooth is constructed at the entrance of a privately funded highway
b. Individuals contribute toward a national defense program by paying taxes to the government.
c. Some homeowners in a mountain resort area refuse to contribute toward paving the area's only access road.
d. You erect a locked gate around your swimming pool to keep out unsupervised children.
c
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From 1970 to 2006, average real income for the top 5% of U.S. households
A) decreased by more than 10%. B) remained virtually unchanged. C) increased by about 5%. D) almost doubled.
Using the "It's not fair if the result isn't fair" principle of fairness, an income tax designed to transfer wealth from the rich to the poor
A) increases efficiency and equity. B) increases efficiency and does not affect equity. C) decreases efficiency and increases equity. D) decreases efficiency and equity.
The main source of revenue for the U.S. federal government is
a. personal income taxes b. corporate income taxes c. sales taxes d. borrowing on financial markets e. revenue from the sale of government goods and services
Because the Fed increased the money supply after the recession in the early 1990s, the
a. AD curve shifted to the left b. economy returned to equilibrium GDP at a price level that was lower than the original price level c. price level continued to increase after the recession ended d. price level fell back to its original level e. long-run equilibrium GDP decreased