BA 372 Lesson 9 Assignment 6

BA 372 Lesson 9 Assignment 6 - Democrats As a result they...

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Ashley B. Hilliard 258-10-0169 July 5, 2010-October 22, 2010 BA 372 Lesson#9, Assignment 6 1. Chapter 20 uses the analogy of a "leaky bucket" to explain one constraint on the redistribution of income. A. What elements of the U.S. system for redistributing income create the leaks in the bucket? Be specific. Leaks in the bucket are caused by the administrative costs of redistributing income, people who lie about their income to cheat the system, and the fact that labor supply is elastic, so that redistributive taxes reduce labor supply management costs of income redistribution, people hide their income, labor supply is the fact that flexibility, resulting in inhibition of income redistribution, labor supply. B. Do you think that Republicans or Democrats generally believe that the bucket used for redistributing income is leakier? How does that belief affect their views about the amount of income redistribution that the government should undertake? Commonly, Republicans believe the redistributive bucket is more leaky than do
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Unformatted text preview: Democrats. As a result, they think the government should do less redistribution of income than do Democrats. 2. What are the pros and cons of in-kind (rather than cash) transfers to the poor? The in-kind transfers are useful, so that poor families get what they really need. In particular, they received food and clothing rather than alcohol and drugs. However, the in-kind transfers of cash transfers is not good, they do not have the opportunity to choose other alternatives, because the family know best what they need. 3. John and Jeremy are utilitarian’s. John believes that labor supply is highly elastic, whereas Jeremy believes that labor supply is quite inelastic. How do you suppose their views about income redistribution differ? Since John believes that labor supply is highly elastic, he will want less redistribution of income, because elastic labor supply means a greater distortion from redistributive policies....
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