1. Explain the four questions of public finance. 2. Subnational governments collect only part of total tax revenues and spend more than they receive from their taxpayers. How is it possible and what does it imply for local finance? 3. Suppose your town wishes to build a dam to protect itself from the risk of flooding. Despite the fact that each family in the town is willing and able to pay up to $200 to have the dam built and it will cost only $150 per family, a voluntary contribution campaign is unable to raise enough funds to build the dam. Why? What type of problem is this, and what solution would you recommend? 4. Does taxing the wealthy to give benefits to the poor increase social welfare? Explain.
1. Explain the four questions of public finance. 2. Subnational governments collect only part of total tax revenues and spend more than they receive from their taxpayers. How is it possible and what does it imply for local finance? 3. Suppose your town wishes to build a dam to protect itself from the risk of flooding. Despite the fact that each family in the town is willing and able to pay up to $200 to have the dam built and it will cost only $150 per family, a voluntary contribution campaign is unable to raise enough funds to build the dam. Why? What type of problem is this, and what solution would you recommend? 4. Does taxing the wealthy to give benefits to the poor increase social welfare? Explain.
Chapter5: Bond, Bond Valuation, And Interest Rates
Section: Chapter Questions
Problem 1iM
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Transcribed Image Text:1. Explain the four questions of public finance.
2. Subnational governments collect only part of total tax revenues and spend more than
they receive from their taxpayers. How is it possible and what does it imply for local
finance?
3. Suppose your town wishes to build a dam to protect itself from the risk of flooding.
Despite the fact that each family in the town is willing and able to pay up to $200 to
have the dam built and it will cost only $150 per family, a voluntary contribution
campaign is unable to raise enough funds to build the dam. Why? What type of problem
is this, and what solution would you recommend?
4. Does taxing the wealthy to give benefits to the poor increase social welfare? Explain.
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