Briefly and concisely define the following terms:
a. fiscal federalism
b. horizontal equity
c. vertical equity
d. benefits principle of taxation
What will be an ideal response?
a. Fiscal federalism is a system of intergovernmental transfers. The federal government makes various sorts of grants to state and local governments, and states make grants to municipalities and school districts, for example.b. Horizontal equity is the notion that equally situated individuals should be taxed equally. This is very difficult to measure and implement in practice.c. Vertical equity refers to the notion that differently situated individuals should be taxed differently in a way that society deems to be fair. One possible way to do so is progressive taxation, and another is to tax on the ability-to-pay principle.d. The benefits principle of taxation holds that people who derive the benefits from services should pay the taxes that finance those services. Examples include the gasoline tax; the tax money is used to maintain and build highways and roads.
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Which of the following are reasons economists consider valid for trade protection?
I. Protection penalizes countries that have weak environmental standards. II. Protection limits dumping of low-wage jobs into the domestic economy. III. Protection prevents low-wage jobs in foreign countries from lowering wages in the United States. A) I and II B) II and III C) I, II, and III D) none of the above
Which financial intermediary has been required by regulation to concentrate its lending in the mortgage market?
A) commercial banks B) savings-and-loans C) credit unions D) state and local government retirement funds
Based on the information above, the labor force participation rate is
A) 36%. B) 40%. C) 44%. D) 90.1%. E) 66%.
A unit tax of $1 will always
A) shift the supply curve upward by more than $1. B) shift the supply curve upward by less than $1. C) shift the supply curve up by exactly $1. D) leave the supply curve unchanged.