Explain why charitable giving is Pareto superior move. Is there an economic explanation of why the supply of charity might be sub-optimal? Explain
What will be an ideal response?
Charitable giving is a Pareto superior move, almost by definition. This is because both givers and recipients of charity must be better off from the exchange (at least ex ante) in order for the exchange to happen. A possible economic explanation of why the level of charity produced through voluntary exchange might be sub-optimal is because charity has some characteristics of a collective consumption good. Knowing that other individuals give to charity gives me enough utility that I can free ride on the donations of others. Because of the incentives to free ride on the charity of others, charity could be underprovided.
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GDP data alluding to the start of a recession in January 2015 was published and analyzed by the Fed in July 2015
The Fed held meetings to formulate a monetary policy to deal with the recession, and then it enacted the chosen policy in September 2015. It was December 2015 before the policy actually began to affect the economy. The three-month period from September 2015 to December 2015 exemplifies a(n) A) recognition lag. B) implementation lag. C) impact lag. D) liquidity lag.
Consider two people, Sandy Roos, who earns $25,000 . and Gary Behrman, who earns $50,000 . If the current flat-tax rate is 20 percent, then
a. Gary would prefer a poll tax to a flat tax b. Sandy would prefer a poll tax to a flat tax c. Gary and Sandy both pay the same amount of tax d. Sandy would prefer the flat tax to a progressive income tax e. Gary would prefer a progressive income tax to the flat tax