No.1. Suppose there is an economy where 80 percent of people earn more than their parents and
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Question:
No.1. Suppose there is an economy where 80 percent of people earn more than their parents and 40 percent end up in a different income quintile than their parents. These statistics describe which of the following in terms of the income distribution?
- There is high income inequality.
- There is high income inequality but low income mobility.
- There is high income mobility.
- There is high income mobility but the income inequality is getting lower.
No.2. Which of the following explains why most people's marginal tax rate is higher than their average tax rate?
- The marginal tax rate is the tax you paid on economic activities such as stock and bond trading, while the average rate is the overall proportion of income paid in taxes.
- Marginal tax is only paid by high-income households who earn more than the national average income. Households earning less than the average pay the average tax rate.
- The average tax rate is the tax you pay on your last dollar earned, while the marginal rate is the overall proportion of income paid in taxes.
- The marginal tax rate is the tax you pay on your last dollar earned, while the average rate is the overall proportion of income paid in taxes.
No.3 Common resource problems can be resolved or reduced using quotas, but tradeable permits are likely to result in more efficient outcomes because:
- no one will have to reduce consumption of the good.
- resources are allocated to the highest value users.
- the optimal amount of the resource will necessarily be chosen.
- the good becomes nonrivalrous.
Public goods are usually (Click to select) by private markets
- overprovided
- underprovided
- allocated efficiently
No.4 Even with a Pigovian tax, a market with a negative externality may still be inefficient because:
- the distribution of surplus may not be fair.
- taxes create deadweight losses.
- the government may not have the power to tax.
- the tax may be set too high or too low.
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