Normative analysis is very important to public finance because _____
a. public policy enacted by government is the result of voting by individuals
b. positive analysis is full of value judgments
c. we should be concerned with how the world works
d. voluntary exchanges are economically efficient
a
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When people convince themselves that they "knew all along" what was going to happen, when in fact their predictions were incorrect, they suffer from:
A. overconfidence bias. B. self-serving bias. C. framing bias. D. hindsight bias.
As the economy contracts, tax revenues:
A. fall and transfer payments rise, causing the economy to contract by less than it would in the absence of automatic stabilizers. B. fall and transfer payments fall, causing the economy to contract by more than it would in the absence of automatic stabilizers. C. rise and transfer payments rise, causing the economy to contract by more than it would in the absence of automatic stabilizers. D. rise and transfer payments fall, causing the economy to contract by less than it would in the absence of automatic stabilizers.