Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes
Utilitarians reject complete equalization of income because they believe that people respond to incentives. As such, redistribution will reduce some people's work efforts, which can actually lead to less total income generated in the economy. If the government attempts to redistribute income from the rich to the poor through taxes, some of the money will be lost due to the distorted incentives and deadweight losses associated with the taxes. We can think of the government as transporting the redistributed income in a "leaky bucket.".
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Refer to the Article Summary. Explain how the declining labor force could have led to the decrease in the unemployment rate
What will be an ideal response?
Assume an economy experiences, for a given period, a 5% increase in output and a 1% increase in productivity. Given this information, we know that which of the following occurred for this economy during this period?
A) The unemployment rate increased during this period. B) The unemployment rate decreased during this period. C) The unemployment rate did not change during this period. D) The effects on the unemployment rate are ambiguous. E) none of the above