The Public Sector - Assessment

Answer the following questions:

1. Explain why tax dollars are used to produce national defense, elementary school education, and roads. Explain why, without government, these services would not be provided in the private sector.

2. If the national, state and local governments had no power to tax, what goods and services would we have to do without?

3. What would you predict the probable economic consequences of the following scenario: Congress passes, and the President signs into law, a bill that makes it illegal for any government to settle disputes over property rights. From now on, property-related matters will be settled privately.

4. Explain why there is a role for the government in dealing with pollution, vaccinations, and medical research; recommend what this role would be.

5. Explain why state and local governments use public money for elementary education and why tobacco and gasoline are heavily taxed.

6. Explain why there is usually only one local water supplier.

7. Explain why, although most Americans say they are in favor of reducing the deficit, Congress does not vote to increase taxes.

8. Analyze the following scenario: The United States allows Taiwan to export shirts to this country without placing a tariff on the imports. The Taiwanese can produce shirts at half the cost of shirts produced by American manufacturers. What groups in the United States and in Taiwan will be helped, and what groups will be hurt, if the United States continues the present free-trade policy toward Taiwan? Prepare an argument supporting the American shirt manufacturer's desire for a tariff on Taiwanese shirts

9. Explain the statement. Removing rent controls in New York City is good economics but bad politics. Also, explain who would gain and who would lose as a result of 10 percent ceiling on credit card interest rates.