Explain the difference between the "fair rules" and the "fair results" guidelines for competitive market fairness
What will be an ideal response?
Economists do not agree on how to judge whether an outcome is fair. Some believe that an outcome is not fair if the results are not fair. Consider how incomes are distributed by the labor market. Because income is not distributed equally, one group of economists believes that the labor market is not a fair market. To make the outcome (and results) fair, these economists believe that income should be redistributed by the government.
Other economists are not concerned with fair results. They aren't concerned with the unequal distribution of income as long as the rules to earn income are fair. As long as there is voluntary exchange and property rights are enforced, this group of economists believes the market outcome is fair.
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The concept of externalities means that subsidizing education can be justified on the grounds that as a student becomes better educated, the student will
A) earn a higher income. B) enhance the lives of people around the student. C) make contributions to the student's alma mater. D) none of the above
The idea that similar foreign and domestic goods, or baskets of goods, should have the same price when priced in terms of the same currency is called
A) equity. B) purchasing power parity. C) efficiency. D) the tragedy of the commons.
The Medicare tax is applied only to the first $87,000 of income
a. True b. False