SPEA V-186 Exam Questions and Correct
Answers
Public Goods
Goods with non-excludability and non-rivalry; e.g., national defense.
Externalities
Third-party effects from actions; e.g., vaccination (positive), pollution (negative).
Privatization
Government transferring services; efficiency gains vs. loss of public control.
Social Efficiency
Maximizing societal benefit; related to Pareto Optimality.
Principles of Sound Tax Policy
Simplicity, transparency, neutrality, stability, and revenue adequacy.
Tax Avoidance vs. Tax Evasion
Legal vs. illegal minimization of tax liabilities.
Marginal Income Tax Brackets
Rates for specific income ranges; affect taxpayers progressively.
Effective Tax Rate
Percentage of total income paid in taxes; actual burden.
Value-Added Tax (VAT)
, Tax on value added at each production stage; differs from sales tax.
Regressivity of Consumption Taxes
Disproportionate impact on lower-income earners; mitigations include exemptions.
Property Tax
Stable revenue for local governments; potential regressivity and valuation challenges.
General Obligation Bonds
Backed by full faith and credit; distinct from revenue bonds.
Subsidiarity Principle
Higher levels perform tasks effectively; intergovernmental relations.
Categorical vs. Block Grants
Specific vs. broad use with local discretion; implications for federal conditions.
Information Asymmetry
One party has better information; leads to market failure.
Common Goods
Non-excludable but rivalrous; susceptible to overuse.
Pareto Optimality
Situation where no reallocation makes some better off without making others worse off.
Majority Voting
Answers
Public Goods
Goods with non-excludability and non-rivalry; e.g., national defense.
Externalities
Third-party effects from actions; e.g., vaccination (positive), pollution (negative).
Privatization
Government transferring services; efficiency gains vs. loss of public control.
Social Efficiency
Maximizing societal benefit; related to Pareto Optimality.
Principles of Sound Tax Policy
Simplicity, transparency, neutrality, stability, and revenue adequacy.
Tax Avoidance vs. Tax Evasion
Legal vs. illegal minimization of tax liabilities.
Marginal Income Tax Brackets
Rates for specific income ranges; affect taxpayers progressively.
Effective Tax Rate
Percentage of total income paid in taxes; actual burden.
Value-Added Tax (VAT)
, Tax on value added at each production stage; differs from sales tax.
Regressivity of Consumption Taxes
Disproportionate impact on lower-income earners; mitigations include exemptions.
Property Tax
Stable revenue for local governments; potential regressivity and valuation challenges.
General Obligation Bonds
Backed by full faith and credit; distinct from revenue bonds.
Subsidiarity Principle
Higher levels perform tasks effectively; intergovernmental relations.
Categorical vs. Block Grants
Specific vs. broad use with local discretion; implications for federal conditions.
Information Asymmetry
One party has better information; leads to market failure.
Common Goods
Non-excludable but rivalrous; susceptible to overuse.
Pareto Optimality
Situation where no reallocation makes some better off without making others worse off.
Majority Voting
