A nation’s citizens often dislike the economy’s distribution of income. Explain two methods for creating a more equal distribution of income.
What will be an ideal response?
One method is to override the market distribution of income to force a more equal distribution of these incomes. A second method, that is used to varying degrees in virtually all private-enterprise economies, is to use transfer payments, sums of money that individuals receive from the government without providing any goods or services in return. By taxing wealthier individuals and giving transfer payments to poorer individuals, a more equal distribution of after-tax income may be achieved.
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One difference between the demand for a private good and that for a public good is that
A) with a private good, each consumer chooses the quantity she wants to consume but with a public good, everyone consumes the same quantity. B) the marginal benefit from consuming the last unit of a public good always exceeds the marginal benefit from consuming the last unit of a private good because there are externalities in the consumption of the public good. C) with a private good, each consumer receives different amounts of benefit from consuming the product but with a public good, every consumer realizes the same amount of benefit from consuming the product. D) with a private good, each consumer chooses the quantity she wants to consume but with a public good, each consumer chooses the price she is willing to pay for a fixed quantity.
In an unfunded pension system where current contributions are paid out to current beneficiaries, the total amount of funds available to invest _____ and the interest rate _____
a. falls; falls b. rises; rises c. falls; rises d. rises; falls
When the chairman of the Federal Reserve announced a goal of "zero inflation," which of the following economic policies was most likely being changed?
A. Supply-side policy. B. Monetary policy. C. Fiscal policy. D. Congressional policy.
A standardized good or service is one:
A. for which any two units of it have the same features and are interchangeable. B. for which any two units of it have similar features that could be considered close substitutes. C. for which any two units of it have different, unique features. D. that has very distinguishable characteristics, with each unit being economically unique.