Document on Economics | Assignment
Added on 2020-03-16
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0ECONOMICS ASSIGNMENTECONOMICS ASSIGNMENTName of Student:Name of University:Author Note:
1ECONOMICS ASSIGNMENTTABLE OF CONTENTPAPER-2014.......................................................................................................................................2PAPER-2015.......................................................................................................................................9PAPER-2016.....................................................................................................................................14REFERENCE...................................................................................................................................22
2ECONOMICS ASSIGNMENTPAPER-2014Question 2a)The diverse economy leads to diversity in economic and subsequent social conditions ofthe people with evident presence of inequalities in resource distribution. The imposition oftax by government can create different amount of burden on people who earn differently orbelonging to different segment of social status. Thus government as policy maker shouldalways have sound knowledge about incidence of tax when imposing a tax. Application oftax makes the price of goods and services higher for both the consumers and sellers. Evenif sellers are taxed on the production or inputs the part of it is passed on the buyers.Moreover, buyers also pay direct taxes when buying or consuming any product or service.Difference in demand and supply elasticity create difference of the incidence of tax onbuyers and sellers that further influences their demand and supply decisions and hence themarket transaction changes. If a non flexible and constant tax rate is imposed then peoplewith lower income will face more incidence of tax that would drain out their resourcesmore and reduce ability to consume or save deteriorating their economic situation. Thusincidence of tax should be born in policy maker’s mind.b)If cigarettes are taxed then the per unit price of the smoke will go up. As per the theory ofdemand, higher the price become lower is the demand made by the consumers. Going bytheory, imposition of tax or increasing the rate of tax would make smoking costlier andhence demand for it would fall. But in reality the incidence of tax might not curb thedemand as claimed if taste and preference is higher leading to inelastic demand. Moreoverthose who has increasing income would anyhow be able to pay the higher tax than the one
3ECONOMICS ASSIGNMENTwho has income fixed at some level If the demand for smoke is inelastic then for one unitchange increase in price, fall in the demand would be less than one unit. Thus higher taxingcan fail the motive of the policy maker.c) A common source from property taxation has been stamp duty for government over theyears. The amount of tax is derive based on the value property in subject has. The amountalso varies based on different state operation and condition of the property. It is legallymandatory to pay stamp duty that can also act as evidence regarding purchase or sale ofassets or properties. It refers to a fixed rate of tax designed and implemented on legal basisby the government. This is more like constant tax rate The movement of governmenttoward a tax system based on value of property would be more like progressive taxation.This would allow to earn greater tax revenue from the property coming from high rate ofproperty tax rate if the property valuation is higher. The lower tax rate is applied on theproperties that have lower values. This create more flexibility and fairness in the taxcollection along with equity and greater productivity in terms of amount collected asrevenue from tax. It is convenient for higher value of asset holder to pay more tax thansomeone who has lower value of asset. The economy and convenience of a good taxstructure is thus maintained.Question 3 a)In the mixed economic situation, the role of government is dual. Beside dealing withformulation and implementation of the public policies, the government also intervene indesigning and executi9ng various economic role such are discussed as major function ofgovernment in any nation. The functions deal with allocation, distribution, stabilization and
4ECONOMICS ASSIGNMENTregulation of the economic operation in the country. These bring forth the mandate of rolesthe government adopts. Allocative role: This refers to the functional role government plays in order to determinehow to allocate public resources within economy. The detailed plan of governmentallocation is outlined evidently n the annual budget prepared by the government. Theprovision of public goods for the general mass are in hands of government who firs plansthe allocation based on the projects undertaken by government such as constriction ofroads, bridges, flyovers, spending in educational programs and health care planning. Theservices of major public goods like defense are under the discretion of administration ofgovernment. Irrespective of the affordability and other concerns the public goods has to beprovided to mass and thus allocative role of government is much crucial to determine thehealth of economy.Distributive Role: The market operation often led to unfair and biased distribution of theresources like income, goods and services, price and so on. The statement basic to the roleof the government focuses to arrive at the judgment formed collaboratively regardingdesirability of income distribution. The ambition of government intervention is to achievedifferent targets like provision of floor to income, increasing the equality in opportunitiesfor the benefit of all the sectors in the economy, removing inequality through bringingmore income equality and increasing incentive programs targeting to benefit mass of thepopulation. The policies of taxation and expenditure by the government are the majorinstrument to influence the income distribution and bring equality. Rich are taxed morethan poor in order to achieve fair distribution of income.
5ECONOMICS ASSIGNMENTStabilization Role: This refers to the proactive supervision government has to ascertainsteady and stable growth rate in the economy. The stability or pace of economy often getshampered by sudden fluctuations or long borne chronic economic problems includingbooms, recession, budget deficit, unemployment inflation and so on. The intervention ofthe government in such case focuses on bringing back the stability in the economy. Thestabilization can take place through adoption of proper macroeconomic policies thatinfluence the aggregate demand and supply leading to equilibrium state. The intention ofthe government is to impact the level of price, output, unemployment through monetaryand fiscal policies.Regulatory Role: the individual interest of people or small business in order to earn moreprofit and growth often negative externalities created by them on the surroundingenvironment and people are neglected.. this results into market failure where free marketoperation fails to bring out best an deficient allocation of resources. To bridge the gapbetween individual benefits and social benefit and also the private and social cost of theproduction government takes up various regulatory role in order to ascertain efficiency inproduction and distribution. For example, imposition of tax on carbon emission is aregulatory measure taken up by government in order to ascertain the efficiency and reducenegative externalities. Rules and laws are designed by government in order to regulate andmake market system work efficiently.b)Key properties of public good:Non-Excludable: This refers to the inability of the public goods provision to keepsomeone away from consumption and derivation of utility based on difference of status,economic and social background, ability or affordability. Since most services are free of
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