Explain: “The land value tax is the economist’s ideal; it is neutral in its economic effects.”
What will be an ideal response?
Because the supply of land is fixed, it would seem that a land value tax would have no efficiency loss. If the tax on land were uniform, it would not distort the allocation of resources. The most profitable use of land before the tax is the most profitable use after the tax if every piece of land is taxed the same.
Note: Critics argue that it is virtually impossible to determine the value of land apart from its capital improvements, thus it is difficult to tax land impartially.
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In comparing money to shares of Apple stock, we can say that
A) money is a store of value, but shares of Apple stock are not. B) shares of Apple stock are a store of value, but money is not. C) both money and shares of Apple stock are stores of value. D) neither money nor shares of Apple stock are stores of value.
Explain what may occur when a buyer and a seller have unequal amounts of limited information. Describe two different types of problems that may arise when asymmetric information exists
What will be an ideal response?
The present value of a given payment will be lower
a. if the payment comes sooner than expected b. the lower the prevailing interest rate c. the further in the future the payment is to be received d. the sooner the payment is to be received e. if the payment is made in cash
In the open-economy macroeconomic model, the supply of loanable funds comes from
a. national saving. b. private saving. c. domestic investment. d. the sum of domestic investment and net capital outflow.