Which of the following best explains why high marginal tax rates retard output?
a. High marginal tax rates reduce the incentive to earn, invest, and use resources efficiently.
b. High marginal tax rates will encourage foreign investment.
c. High marginal tax rates will reduce budget deficits and lower interest rates.
d. High marginal tax rates encourage people to substitute more-desired nondeductible goods for less-desired tax-deductible goods.
A
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Refer to Table 9-10. Fill in the following table with the opportunity costs of producing bows and arrows for Tran and Farah
Pens Pencils Tran Farah
Which of the following statements best describes why we cannot be assured that bureaucrats who believe in the mission of their bureaus will always act in the public interest?
a. Logrolling among members of Congress ties the hands of the bureaucracy, preventing them from acting in the public interest. b. Bureaucrats do not personally benefit from larger budgets, but if they care about the mission of the bureau they will personally gain from acting in the public interest. c. Free riding on the work of other within the bureau will make acting in the public interest impossible. d. Self-interest is a powerful motivator, regardless of whether an individual operates in the public or private sector.