It is there to allow people to continue to have at least some purchasing power even when they are unemployed. Which policy describes the statement above

a) Mediaid

b)Supplemental Security Income

c) Earned Income Tax Credit

d) Unemployment insurance

Efficient Variation is the dollar equivalent of the loss in utility associated with taxes.

True

False

If we assume that utilities depend not only on their own income, but those of others, then redistribution can be:

1 point

a) equal

b) a Pareto improvement

c) equitable

d) unfair

A difference between AFDC and TANF policy is that under TANF :

1 point

a) grants were taxed at a lower rate if a person was working, but taxed at 100% under AFDC

b) grants were given indefinitely, but for a specific time period under AFCD

c) grants were taxed if person was working, but not taxed under AFDC

d) grants were given even if the person wasn't working, but person had to work under AFDC

If equivalent variation is less than or equal to tax revenues, then it can be concluded that:

1 point

a) the statuary incidence is equal to economic incidence

b) the statuary incidence is not equal to economic incidence

c) the tax policy is efficient

d) the tax policy is inefficient

If an economy is facing a expansionary period, i.e low inflation, low unemployment, growing GDP, and the government wants to raise money for a project, then the better option would be to go for:

1 point

a) tax financing

b) debt financing

c) indifferent between both types of finance

d) none of the above

Option 5

If the statutory incidence of a commodity tax is on sellers, the economic incidence of the tax is on:

1 point

a. sellers, regardless of the elasticity of demand.

b. buyers, regardless of the elasticity of demand.

c. sellers if demand is perfectly inelastic.

d. buyers if demand is perfectly inelastic.

The more _________the demand curve the more the tax borne by consumers and same for supply side

1 point

a) elastic

b) inelastic

c) perfectly elastic

d) perfectly inelastic

Tax financing is more efficient than debt financing.

1 point

True

False

Internal debt financing does not put a burden on future generations.

1 point

True

False

Elasticity of demand for labour is 0.5, and worker works for 5000 hours annually at a wage of $10 per hour. The government imposes a tax if 5% on this market. What is the deadweight loss associated with this tax:

1 point

a) 3.125

b) 31.25

c) 625

d) 1250

The economic incidence of a tax indicates which party really pays the tax.

1 point

True

False

If the government is catering for intergenerational equity, and it is known that the future generations will be better off than current generations and the government wants to raise money to curb its budget deficit, then the better option would be to go for:

1 point

a) tax financing

b) debt financing

c) indifferent between both types of finance

d) none of the above

One limitation of EITC is:

1 point

a) discourages work completely

b) discourages work in the phase out range

c) discourages work in the phase in range

d) discourages work in the constant range

Statutory incidence states:

1 point

a) who is paying the tax

b) how the excess burden occurs due to the tax

c) on whom the tax burden falls

d) none of the above

A subsidy decreases willingness to pay for consumers if subsidy is given to the consumers.

1 point

True

False

When average tax is decreasing and marginal tax is constant with decreasing income and tax levels, the tax system is said to be:

1 point

a) Progressive

b) Regressive

c) Proportional

d) None of the above

If the loss in total surplus is equal to the tax revenues, then it can be concluded that:

1 point

a) the statuary incidence is equal to economic incidence

b) the statuary incidence is not equal to economic incidence

c) the tax policy is efficient

d) the tax policy is inefficient

When the gain of taxes is greater than the loss of taxes, it results in deadweight loss.

1 point

True

False

If the gain in total surplus is less than the cost of a subsidy, then it can be concluded that:

1 point

a) the statuary incidence is equal to economic incidence

b) the statuary incidence is not equal to economic incidence

c) the subsidy is efficient

d) the subsidy is inefficient

For a perfectly inelastic demand curve and a unit tax on the supply side, the statutory incidence is equal to economic incidence.

1 point

True

False