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Public Economics Questions

Public Economics Questions - Questions Chapter 1 1 What is...

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Questions: Chapter 1 1 What is the difference between the state and the government? 2 Why is the rule of law not necessarily the same as the rule of government? 3 Is the rule of law inconsistent with laws and regulations that are retrospective? 4 Why are property rights essential to well-functioning economies? Explain why legal enforcement of property rights may be viewed as a public good. 5 What is the invisible hand? How does it work? 6 What are the main economic functions of government? What is the basis for these functions? 7 Suppose, as economists often do, that the aim of public policy is to maximise social welfare. What would be the main components of social welfare? Should the welfare y of non-citizen residents have the same weight in a welfare function as citizens of a country? 8 Which of the following are normative statements? Why? • Full employment is a desirable policy. • Reducing unemployment will increase the rate of inflation. • Lower interest rates will reduce the number of unemployed persons. • Redistributing income from the rich to the poor increases social welfare. • Economists should not make normative statements. 9 Rational decision making implies that decisions should be based on marginal considerations. Can this principle be applied to the public sector? If so, how? 10 Give some examples of how price theory may apply to public decisions. 11 What arguments can be put for government subsidies for university students? Are these positive or normative arguments? Questions: Chapter 2 1 If government size is measured by the ratio of general government expenditure to GDP, what happens to the size of government if:
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i. government increases welfare payments to unemployed persons, when such transfer payments are not recorded as part of GDP? r y ii. unemployment rises? iii. interest rates fall? iv. government increases income tax rates? v. government requires all households with more than a certain level of income to hold private health insurance? vi. government subsidises private health insurance? 2 Explain why tax expenditures can have the same real effects as actual government expenditures. Give an example. 3 Explain the difference between cash and accrual accounting. 4 What is the distinction between current and capital expenditure? What are the arguments for and against treating capital expenditure differently in the government’s accounts? 5 The headline cash budget balance is a common measure of budget outcomes. What are the main weaknesses of this measure? 6 Are student university fees included in Commonwealth government revenue? And are HECS repayment obligations included in the net worth of the Commonwealth? 7 The Australian government has established a Future Fund with funds from budget surpluses and asset sales quarantined in the fund to pay for unfunded superannuation liabilities. What are the main arguments for and against such a fund?
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Public Economics Questions - Questions Chapter 1 1 What is...

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