EBK INTERMEDIATE MICROECONOMICS AND ITS
EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 16.8, Problem 1.1TTA
To determine

Reason for rise of GDP fraction to government during WWII. Whether it shows increase in demand for public goods or increase in spending by government.

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Let's walk through the median voter theorem in a little more detail. Consider a town with three voters, Enrique, Nandini, and Torsten. The big issue in the upcoming election is how high the sales tax rate should be. As you'll learn in macroeconomics (and in real life), on average, a government that wants to do more spending has to bring in more taxes, so "higher permanent taxes" is the same as "higher government spending." Enrique wants low taxes and small government, Nandini is in the middle, and Torsten wants the biggest town government of the three. Each one is a stubborn person, and his or her favorite position-what economic theorists call the "ideal point-never changes in this problem. Their preferences can be summed up like this, with the x denoting each person's favorite tax rate: Enrique 0% N O Sales tax rate Nandini P Torsten 20% Suppose there are two politicians running for office, N and O (so ignore P for now). Enrique will vote for Choose your answer. Nandini will vote for…
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