Public Economics Quiz

Multiple Choice

1. What is public economics?

A. The study of taxation and government spending B. The study of public policy C. The study of public goods and services D. The study of international trade

2. What is the primary goal of public economics?

A. To reduce poverty B. To increase economic growth C. To promote economic efficiency D. To create jobs

3. What is a public good?

A. A good or service that is non-rival and non-excludable B. A good or service that is provided by the government C. A good or service that is provided by private businesses D. A good or service that is provided by the community

4. What is an example of a public good?

A. Street lighting B. Private healthcare C. Private education D. Public transportation

True/False

1. Public economics is concerned with the study of taxation and government spending.

True False

2. Public goods are goods and services that are rival and excludable.

True False

3. Public goods are usually provided by the government.

True False

4. Public transportation is an example of a public good.

True False

Fill-in-the-Blank

1. The primary goal of public economics is to ___________.

promote economic efficiency

2. A public good is a good or service that is ___________ and ___________.

non-rival, non-excludable

3. An example of a public good is ___________.

street lighting

Short Answer

1. What is the difference between private goods and public goods?

Private goods are goods and services that are rival and excludable, meaning that they are limited in supply and can be withheld from certain individuals. Public goods are goods and services that are non-rival and non-excludable, meaning that they are available to everyone and cannot be withheld from certain individuals.

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Public Economics Practice Sheet

1. What is Public Economics?

Public Economics is the study of how governments make decisions, how taxes affect economic activity, and how the public and private sectors interact in the economy. It looks at how governments can use taxes, spending, and regulation to achieve economic and social objectives.

1. What are the different types of taxes?

There are three main types of taxes: income taxes, sales taxes, and property taxes. Income taxes are taxes on a person's income, sales taxes are taxes on the sale of goods and services, and property taxes are taxes on the ownership of real estate.

1. What is the purpose of taxation?

The purpose of taxation is to raise revenue for the government to fund public services, such as education, healthcare, and infrastructure. Taxation also helps to reduce income inequality by redistributing income from higher-income households to lower-income households.

1. How does taxation affect economic activity?

Taxation affects economic activity in two main ways. First, taxes can reduce incentives to work, save, and invest. This reduces economic growth and can lead to higher unemployment. Second, taxes can affect the distribution of income, which can affect consumption and investment decisions.

1. What is the Laffer Curve?

The Laffer Curve is an economic theory that suggests that there is an optimal level of taxation that maximizes government revenue. The theory states that if taxes are too low, then people have no incentive to work, and if taxes are too high, then people have no incentive to work.

1. What are the benefits of public spending?

Public spending can have many benefits. It can provide economic stimulus, help reduce poverty and income inequality, and fund public services such as healthcare and education. Public spending can also help to create jobs and promote economic growth.

1. What is the difference between public and private goods?

Public goods are goods that are provided by the government and are available to everyone, such as national defense and public parks. Private goods are goods that are provided by private companies and are only available to those who can afford them, such as cars and televisions.

1. What is fiscal policy?

Fiscal policy is the use of taxation and government spending to influence the level of economic activity. Fiscal policy can be used to stimulate the economy during a recession, or to reduce inflation during an economic boom.

1. What is the difference between progressive and regressive taxation?

Progressive taxation is a system of taxation where people with higher incomes pay a higher tax rate than people with lower incomes. Regressive taxation is a system of taxation where people with lower incomes pay a higher tax rate than people with higher incomes.

1. What is the difference between a budget deficit and a budget surplus?

A budget deficit occurs when government spending exceeds government revenue. A budget surplus occurs when government revenue exceeds government spending.