QUESTION 7 Which of the following statements concerning the relationship between

Question

QUESTION 7 Which of the following statements concerning the relationship between income and growth and taxes and government spending are correct? The level of government spending that would maximize income and be most conducive to economic growth is zero. O A recent study found that the full cost in the U.S. of the marginal dollar of government spending is two dollars. The full cost of a dollar of government spending is a dolar that must be raised through taxation The full cost of a dollar of government spending usually exceeds a dollar, because taxes distort prices, thereby creating deadweight (or social welfare) losses. QUESTION 8 Which of the following statements concerning income redistribution are correct? he presence of extensive requirements, restrictions and payments in an in government rans er programs is evidence hat the wellbeing of the poor is the primary concern o these programs. The presence of extensive requirements, restrictions and payments in kind in government transfer programs is evidence that the creation of an extensive bureaucracy to administer them is a major, if not the primary concem of these programs , if redistribution was really aimed at pursuing equality, redistribution of wealth rather than income would be practiced There is generally no trade-off between policies aimed at redistribution and those aimed at efficiency. QUESTION 9 According to Robert Barro, the best way to characterize the relationship between democracy and economic growth is some democracy is good for growth, but beyond a moderate level additional democracy reduces growth. O The higher the degree of democracy, the lower is economic growth O The higher the degree of democracy, the higher is economic growth O Some democracy is bad for growth, but beyond a moderate level additional democracy increases growth.

Explanation / Answer

7)

Options 2, 3, 4 are correct

.8) option 1, 4

9) option a is corret. After a level of economic growth has been achieved excessive democracy retards growth incentives.

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