e3 335 sample - Economics 335 - SAMPLE FINAL Directions:...

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Economics 335 - SAMPLE FINAL Directions : Answer all questions. Write legibly, concisely and coherently. Be sure to label all axes, functions, and variables you use. READ QUESTIONS CAREFULLY. Draw graphs whenever possible. Maximum test score = 150 points. Total time for the test is 2.5 hours = 150 minutes. The point score for each question is equal to the amount of time allotted for the question. Part I. Short essay. Answer five of six @ 14 minutes/points each. Either answer the question straight-out or critically evaluate the statement made and explain why or in what way it is true, false, or uncertain. 1. During the Dole vs. Clinton election Senator Dole kept talking about cutting the capital gains tax to stimulate the economy. According to the Haig-Simons definition of income, how should capital gains be treated under an income tax? Give two reasons based on either the notions of equity or efficiency that support treating capital gains preferentially. Give two reasons why capital gains should not be treated preferentially. 2. Assuming a competitive market, diagrammatically illustrate the affect of a per unit tax on gas using demand and supply analysis. Assume the demand curve and supply curve are typically shaped. Identify any change in consumer surplus and producer surplus, as well as government expenditure and the excess burden, if there is any. 3. From a general equilibrium point of view, ala' Harberger (the simple two-sector general
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e3 335 sample - Economics 335 - SAMPLE FINAL Directions:...

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