Personal consumption expenditures:
a. represent close to two-thirds of GDP.
b. are equal to personal income minus individual taxes.
c. include durable good purchases but not nondurable good purchases.
d. do not include any intangible consumption items.
e. include all goods and services bought by the government.
a
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The sales tax
A) is not consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income individuals, yet pay the same sales tax rate. B) is consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income people. C) is not consistent with the ability-to-pay principle because low-income individuals tend to spend a larger fraction of their income than do high-income individuals. D) is not consistent with the ability-to-pay principle because low-income individuals tend to purchase a smaller bundle of goods and services compared to high-income individuals.
Explain why a subsidy will not solve the problem of producing less than is socially optimal of a pure public good