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(1) The federal government is considering selling tracts of federally owned land to private developers and using the revenues to provide aid to victims of an earthquake in a foreign country. How would this policy affect the levels of federal revenues, expenditures, and deficits under a cash accounting system? What would be different under a capital accounting system?
(2) A government is considering paving a highway with a newly developed "wear-proof" material. Paving the highway would cost $2 billion today, but it would save $300 million in maintenance costs for each of the next 10 years. Use the concept of present value in maintenance costs for each of the next 10 years. Use the concept of present value to determine whether the project is worth undertaking if the government can borrow at an interest rate of 5 %. Is it worth it if the interest rate is 0 %? 10 % ? A politician says to you, " I don't care what the interest rate is. The project is clearly a good investment: it more than pays for itself in only 7 years, and all the rest is money in the bank." What's wrong with this argument and why does the interest rate matter?
(3) Suppose that demand for a product is Q-1200- 4P and supply is Q= -200 +2P? Furthermore, suppose that the marginal external damage of this product is $8 per unit. How many more units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.
A dam is proposed on a stretch of wild river, a river that is currently used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years, after w
There has been a long history of research on ‘the policy process' which is ‘closely connected to efforts to examine the nature of power in society and to specify the necessary cond
Free Publicity is only the periodical subscription. This is only in newsletter in which one spills the guts about publicity. It is your chance to tap into one's brain and dig out a
The require for illegal drugs is inelastic. Much of the expenditure on illegal drugs comes from crime. Suppose these statements to be correct, 1. How will a successful campai
What makes a public opinion poll scientific 1. To what extent do we really think about political issues as individuals, or are we more influenced by our environment -family, t
why is public finance important?
As you know, the principal-agent problem stress the effect of asymmetric information between the principal and the agents on economic outcomes, the equilibrium in a principal-agent
A change in the legal statute may be able to force an equilibrium if it leads to a new equilibrium which implies some revised belief which sustains the equilibrium. Tirole (1996)
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