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Chap Chap 1 and 2 lecture notes

Chap Chap 1 and 2 lecture notes - Chap 1 Introduction 1...

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Chap 1: Introduction 1. Public finance, also known as public sector economics or public economics, focuses on the taxing and spending of government and their influence on the allocation of resources and distribution of income. Economics: A) started as a business application. B) can never be defined. C) is the study of unlimited wants but limited resources. D) has no “real world” relevance. 2. Public finance economists both analyze actual policies and develop guidelines for government activities. In the latter role, economists are influenced by their attitudes toward the role of government in society. Discuss your views on government intervention regarding tobacco consumption. 3. In an organic view of society, individuals are valued only by their contribution to the realization of social goals. These goals are determined by the government. 4. In a mechanistic view of society, government is a contrivance erected to further individual goals. It is not clear how the government can reconcile sometimes conflicting individual goals. 5. Individual decision making is the focus of much economics and is consistent with the mechanistic view of society adopted in this book. This does not eliminate much controversy over the appropriate role of the government in our economy. 6. The Constitution embodies constraints on federal and state government economic activity. 7. The federal government may effectively undertake any expenditures it wishes and may use debt and taxes to finance them. The federal government may not discriminate among states when choosing tax rates and may not place a levy on state exports. The 16th Amendment empowers the federal government to tax personal income.
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