HW1a-Ch1&2_Xtns_Gruber3e - Gruber: 3rd Ed, Public...

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Gruber: 3 rd Ed, Public Finance CHAPTER 1: WHY STUDY PUBLIC FINANCE? Questions and Problems (* = assigned) (1,3,5,6,12,13) *1. Many states have language in their constitutions that requires the state to provide for an “adequate” level of education spending. What is the economic rationale for such a requirement? *3. Some goods and services are provided directly by the government, while others are funded publicly but provided privately. What is the difference between these two mechanisms of public financing? Why do you think the same government would use one approach sometimes and the other approach at other times? *5. Consider the four basic questions of public finance listed in the chapter. Which of these questions are positive— questions that can be proved or disproved—and which are normative—questions of opinion? Explain your answer. *6. One rationale for imposing taxes on alcohol consumption is that people who drink alcohol impose negative spillovers on the rest of society—for example through loud and unruly behavior or intoxicated driving. If this rationale is correct, in
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HW1a-Ch1&2_Xtns_Gruber3e - Gruber: 3rd Ed, Public...

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