HW2b-Ch10_Xtns - program with their own programs Which...

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Homework 2.b: Chapter 10 1. Discuss the difference between federal matching grants and block grants, and describe how they each affect overall state spending in terms of both the income effect and substitution effect. If the federal government gives one state a matching grant of $4 million and another state a conditional block grant of $4 million and requires that both can be used only for policing costs, which state is likely to increase its spending on policing more, and why? 2. What is a tax price of a school equalization scheme? Why might these tax prices affect overall per-pupil spending in a state? 3. Describe the arguments for redistributing from high revenue/spending communities to low revenue/spending communities in each of the following situations: a. The world operates in a perfect Tiebout fashion. b. The world does not operate in a perfect Tiebout fashion 4. Suppose that the U.S. Congress is debating whether to end the Temporary Assistance to Needy Families (TANF) program and instead let local governments replace this
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Unformatted text preview: program with their own programs. Which approach would be more efficient? Explain. 5. Suppose that a city mayor proposes to pay for the acquisition and construction of public parks by implementing a seven-year local sales tax. Someone argues that the financing mechanism should instead be something that is spread out more over time, noting that a person who moves here eight years from now would get to enjoy the parks but under the current proposal wouldn't pay for them. Similarly, this individual argues that those who live in the community now pay for it but, if they move, won't benefit at all from it after a few years. The mayor argues that those who move out of this area will in fact benefit from the parks beyond their personal usage and that those who move to this area after the seven year-period will implicitly pay for the access to the parks. What does the mayor mean? Page 1...
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  • Spring '11
  • RobertPennington
  • United States Congress, Federal government of the United States, Tiebout, perfect Tiebout fashion, overall state spending

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