Question

7) Total U.S. government expenditures as a percentage of GDP were largest during which of the following periods of time?
a. The Great Depression.
b. World War II.
c. The Vietnam War.
d. The Energy Crisis of the mid- and late-1970s.

8) Suppose fairness is defined as those who receive the greatest benefits from government should pay the most in taxes, then which of the following taxation systems would be consistent with this notion of fairness?
a. User fees for national parks.
b. Gasoline taxes to fund highway maintenance.
c. A tax on the poor to finance food stamps and other low-income assistance programs.
d. All of the answers above are consistent with this fairness concept.

Answer 1

7.Ans:- b) World war II

When the country entered the second world war, the US government spending as a percentage of total GDP from 1941 to 1945 was at a average rate of 40% which was 9.1% during the great depression and became stabilised around 20.2% after the war.

8. Ans:- b) gasoline taxes to fund highway maintenance.

Tax fairness theory says that one must pay the tax based on the benefits he recieves from the government which is applicable on private goods. As Gasoline falls under the category of private goods, the benefit recieved principle of taxation is applicable on it to fund highway maintenance.