PS4_samplefinal - Econ 312 Fiscal Policy and Public Finance...

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Econ 312 Fiscal Policy and Public Finance Dr. Pınar Derin Güre SAMPLE FINAL (PROBLEM SET 4) DUE MONDAY, MAY 31(FINAL EXAM DATE) Please bring your problem set’s solutions to the Final Exam Instructions. Please answer the following questions. Write your answers clearly on the final. You can achieve a total 100 points. There are short questions (15/100) followed by long questions (weighed 85/100). You should read all of the questions first. There is a blank page attached at the end of the midterm to be used as scratch paper. GOOD LUCK! SHORT QUESTIONS (15 points) MULTIPLE CHOICES 1. A tax levied on producers is fully shifted to consumers when: a. demand is perfectly elastic. b. demand is perfectly inelastic. c. supply is perfectly inelastic. d. both a and c are true. e. both b and c are true. 2. Suppose that the government were to tax all car wash businesses in your town. Assume that the demand for car washes is perfectly elastic, demand for car wash employees is perfectly elastic in the short run, and the supply and demand of capital (i.e., the car wash equipment) is elastic (but not perfectly so) in the short run and perfectly elastic in the long run. According to general equilibrium tax incidence analysis, __________ bear the tax in the short run and ________ bear the tax in the long run a. car wash employees; capital owners b. land owners and capital owners; land owners
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c. capital owners; land owners and capital owners d. land owners and capital owners; land owners and capital owners e. none of the above 3. Suppose that the government were to levy a tax on all computers sold in Turkey. Assume that all goods are normal goods. Which of the following is a spillover income effect of the tax? a. People buy fewer computers because they are now more expensive. b. People buy fewer computers because people have less income. c. People buy fewer books because people have less income. d. Both b and c are spillover income effects. e. None of the above results is a spillover income effect. 4. The Ramsey rule makes which of the following statements? a. The deadweight loss per dollar of tax revenue generated from commodity taxes should be equal to the deadweight loss per dollar of tax revenue generated from income taxes.
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This note was uploaded on 05/26/2010 for the course ECON 312 taught by Professor Güre during the Spring '10 term at Middle East Technical University.

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PS4_samplefinal - Econ 312 Fiscal Policy and Public Finance...

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