《财政学》罗森英文版课后习题答案上.docx

《财政学》罗森英文版课后习题答案上.docx

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《财政学》罗森英文版课后习题答案上

《财政学》罗森英文版课后习题答案上

Part1-GettingStarted

Instructor’sManualtoaccompany

PublicFinance,TenthEdition,byHarveyS.RosenandTedGayer

Chapter1–Introduction

BriefOutline

1.PublicFinanceandIdeology

a.TheOrganicViewofGovernment

b.TheMechanisticViewofGovernment

c.TheViewpointofThisBook

2.GovernmentataGlance

a.LegalFramework

i.FederalGovernment

ii.StateandLocalGovernments

b.SizeofGovernment

c.Expenditures

d.Revenues

e.OurAgenda

SuggestedAnswerstoEnd-of-ChapterDiscussionQuestions

1.

a.McCain’sstatementisconsistentwithanorganicconceptionofgovernment.

Individualsandtheirgoalsarelessimportantthanthestate.

b.Lockemakesaclearstatementofthemechanisticviewofthestateinwhich

individuallibertyisofparamountimportance.

c.Chavez’sstatementisconsistentwithanorganicviewofgovernment.The

individualhassignificanceonlyaspartofsocietyasawhole.2.Libertariansbelieveinaverylimitedgovernmentandareskepticalabouttheabilityof

governmenttoimprovesocialwelfare.Socialdemocratsbelievethatsubstantial

governmentinterventionisrequiredforthegoodofindividuals.Someonewithan

organicconceptionofthestatebelievesthatthegoalsofsocietyaresetbythestateand

individualsarevaluedonlybytheircontributiontotherealizationofsocialgoals.

a.Alawprohibitingreceivingcompensationfororgandonationwouldbeopposed

bylibertarians,astheywouldwantthemarkettodecidewhobuysandwhosells

organsandatwhatpricetheorganswouldbesold.Socialdemocratsalsomight

opposethelawiftheyconsiderthatsuchalawwouldpreventorgandonation

fromhappeningasfrequently.However,theyarelikelytosupportthelawonthe

groundsthatpayingfororgandonationwouldcoercefinanciallydesperatepeople

toselltheirorgans.Thelawwouldprotecttheindividualfrommakingapoor

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Chapter2-ToolsofPositiveAnalysis

decision.Theorganicviewmightalsoopposethelawbecausethesocietymight

becomehealthierifmoreindividualsreceivedtransplants,althoughtheywould

believethatindividualsshoulddonateforthegoodofsociety,ratherthanfor

compensation.

b.Libertariansopposethelawmandatinghelmetuseformotorcyclists,arguingthat

individualscanbestdecidewhetherornottousehelmetswithoutgovernment

coercion.Socialdemocratstakethepositionthatthemandatesaveslivesand

ultimatelybenefitsindividuals.Theorganicviewwouldprobablyleadto

favoringthemandateonthegroundsthatreducedhealthcarecostscausedby

fewerinjuriesbenefitsociety.

c.Libertariansopposethelawmandatingchildsafetyseats,arguingthatindividuals

canbestdecidewhetherornottousechildsafetyseatswithoutgovernment

coercion.Socialdemocratstakethepositionthatthemandatesaveslivesand

ultimatelybenefitsindividuals.Theorganicviewwouldprobablyleadto

favoringthemandateonthegroundsthatreducedhealthcarecostscausedby

feweraccidentsbenefitsociety.

d.Libertarianswouldprobablyopposealawprohibitingprostitution,whilesocial

democratswouldlikelyfavorsuchalaw.Theorganicviewdependsonthetype

ofsocietypolicymakersareattemptingtoachieve.Thelawwouldprobablybe

favoredonmoralgrounds.

e.Libertarianswouldprobablyopposealawprohibitingpolygamy,whilesocial

democratswouldlikelyfavorsuchalaw.Theorganicviewdependsonthetype

ofsocietypolicymakersareattemptingtoachieve.Thelawwouldprobablybe

favoredonmoralgrounds.

f.Libertarianswouldlikelyopposethebanontransfatsinrestaurants,believing

thatconsumerswilldemandrestaurantsremovetransfatsiftheybelievethatis

important.Socialdemocratswouldprobablysupportthebanbecauseconsumers

mightnotunderstandhowbadtransfatsarefortheirhealth.Thosewithan

organicviewwouldprobablyfavorthebanbecausethescientificliterature

suggeststhatpeoplewhoavoidtransfatsarehealthier,thereforethebanwould

reducehealthcarecosts.

3.Themechanisticviewofgovernmentsaysthatthegovernmentisacontrivancecreatedbyindividualstobetterachievetheirindividualgoals.Withinthemechanistictradition,peoplecoulddisagreeonthetaxonsaturatedfatstoreduceobesity.Libertarianswouldsaythatpeoplecandecidewhatisbestforthemselves-whethertoconsumesaturatedfats-anddonotneedproddingfromthegovernment.Incontrast,socialdemocratsmightarguethatpeoplearetooshortsightedtoknowwhatisgoodforthem,sothatgovernment-providedinducementsareappropriate.

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Part1-GettingStarted

4.

a.Ifthesizeofgovernmentismeasuredbydirectexpenditures,themandatedoes

notdirectlyincreaseit.Costsofcompliance,however,maybehighandwould

appearasanincreaseina―regulatorybudget.‖

b.Thisbanwouldnotincreasegovernmentexpenditures,butthehighcostsof

compliancewouldincreasetheregulatorybudget.

c.It’shardtosaywhetherthisrepresentsanincreaseordecreaseinthesizeof

government.OnepossibilityisthatGDPstayedthesame,andgovernment

purchasesofgoodsandservicesfell.Anotheristhatgovernmentpurchasesof

goodsandservicesgrew,butataslowerratethantheGDP.Onemustalso

considercoincidentfederalcreditandregulatoryactivitiesandstateandlocal

budgets.

d.Thefederalbudgetwoulddecreaseifgrants-in-aidwerereduced.However,if

stateandlocalgovernmentsoffsetthisbyincreasingtaxes,thesizeofthe

governmentsectorasawholewouldnotgodownasmuchasonewouldhave

guessed.

5.Theinflationerodestherealvalueofthedebtby0.036x?

904billionor?

32.54billion.Thefactthatinflationreducestherealdebtobligationmeansthatthisfigureshouldbeincludedasrevenuetothegovernment.

6.Ifyouconsiderthesizeofgovernmentastheextenttowhichsociety’sresourcesaresubjecttocontrolbythegovernment,thebothPolicy1andPolicy2wouldincreasethesizeofgovernmentbythesameamount.WhileitseemsPolicy1hasnoeffectofthesizeofthegovernmentbecauseitonlymandatesprivatespending,itcausesresourcestobeunderthecontrolofthegovernment.Policy2seemstoaffectthesizeofthegovernmentbecauseitchangesrevenuesandtransfers,butthecosttoeachhouseholdisthesameasinPolicy1,a$5000expenditureonhealthinsuranceorinadditionaltaxes.

7.RelativetoGDP,defensespendinggrewfrom5.0percentofGDPin1981to6.0percentofGDPin1985andthengrewfrom3.9percentofGDPin2007to4.7percentofGDPin20011.Theincreasefrom2007to2011wasproportionallylarger,butbothincreaseswerethesameintermsofthepercentagepointincrease.

8.

a.Fortheyears1997to2001,theabsolutechangeinfederalexpenditureswas

$261.7billion[$1862.8-$1,601.2billion],

thechangeinfederalexpendituresinrealterms（2001dollars）was$146.26

billion[inflationrate=（90.727-84.628）/84.628=7.21%,$1,862billion–

$1,601（1+0.0721）=$146.26billion],

thechangeinrealgovernmentexpenditurespercapitawas$241.26[real

governmentexpenditurespercapitain1997（2001dollars）:

$1,601.1*（1+1.0721）/0.227912=$6,289.72;realgovernmentexpendituresper

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Chapter2-ToolsofPositiveAnalysis

capitain2001（2001dollars）:

$1862.8/0.285225billion=$6,530.98;$6,530.98-$6,289.72=$241.26],

andthechangeinexpendituresperGDPis-$0.01106billion[$601.1/$8,332.4–

$1,862.8/$10,286.2].

Fortheyears2007to2011,theabsolutechangeinfederalexpenditureswas$874.4billion[$3,603.1billion-$2,728.7billion],

thechangeinfederalexpendituresinrealterms（2011dollars）was$691.9billion[inflationrate=（113.338-106.231）/106.231=6.69%,$3,603.1billion–

$2728.7（1+0.10669）=$691.9billion],

thechangeinrealgovernmentexpenditurespercapitawas$1,899.78[real

governmentexpenditurespercapitain2007（2011dollars）:

$2,728*（1+1.10669）/0.3017=$9,647.14;

realgovernmentexpenditurespercapitain2011（2011dollars）:

[$3,603/0.3120billion=$11,546.92;$11,546.92$9,647.14=$1,899.78],

andthechangeinexpendituresperGDPis-$0.0442billion[$2,728.7/$14,028–

$3,603.1/$15,094].

b.Thehealthspendingand―other‖categorieshadthelargestrelativeincreaseschangesfrom1997to2001and2007to2011.Netinteresthadtheonlydecreaseinspending.

relativerelative

changefromchangefrom

199720011997to2001200720112007to2011

285.7321.212.426%579.8751.329.579%Defense

123.8172.239.095%266.4372.539.827%Health

190.0217.414.421%375.4485.729.382%Medicare

235.0269.814.809%366.0597.463.224%Incomesecruity

365.3433.018.533%586.2730.824.667%SocialSecurity

244.0206.2-15.492%237.1230.0-2.995%NetInterest

157.3243.154.545%317.9435.536.993%Other

9.

a.The1997to2001absolutechangeinfederaltaxrevenueswas$411.9billion（=$1991.1-$1579.5）,whilefrom2007to2011thesamechangewas-$264.5billion（=$2303.5-$2568.0）.

Inrealterms,the1997to2001changeinfederaltaxrevenueswas$298.04（inflationoverperiod7.21%,realchange=$1991.1-（$1579.2*1.0721）.For2007

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