CÂU HỎI LÝ THUYẾT TÀI CHÍNH CÔNG

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PUBLIC FINANCE THEORY QUESTIONS

CHAPTER I: OVERVIEW OF PUBLIC FINANCE


Question 1. Distinguish between public finance and private finance.

Public finance Private Finance

Relating to the management of money by


governments or public organizations. Is the finance of individuals, organizations,
Containing common interests, public interests: private businesses and non-profit
used to carry out public activities, such as organizations.
building infrastructure, education, healthcare, Used to carry out business, investment,
national defense and security and other public consumption and other financial activities.
services. Private sources of finance include business
Public financial sources include: taxes, fees, and income, personal investments, loans from
loans from local or international financial private financial institutions or commercial
institutions. banks.
Objective: to meet public needs and goals and to Objective: to create profit or added value for
create benefits for the whole society. individuals, organizations, and their
Contains common interests, public interests. shareholders.
The effect cannot be quantified.

Question 2. Distinguish between public finance and state finance.

Public finance State finance

Is a form of state finance to


maintain public activities and
Public finance studies and manages services.
Relationship financial resources for government
agencies and public organizations. State finance includes Public
Finance and State-owned
Enterprises.

Applicable to government agencies, Applicable to all State activities


Object
organizations and activities and public services

Focus on managing, allocating and using


Is a form of tax collection and
Method of revenue and government financial resources to
spending to maintain state
expenditure support the business activities of public
operations and public services.
agencies and organizations.
Question 3. The invisible hand and the visible hand symbolize which sector of the economy. Which
hand do you think is stronger?
The “invisible hand” is a metaphor, an economic idea introduced by economist Adam Smith
in 1776. He said that “The invisible hand” means: in a market economy, individuals
participating want to maximize their own profits. Everyone wants that, so it invisibly
promotes development and strengthens the benefits for the whole community. According to
Adam Smith, the government of each country does not need to interfere with individuals and
businesses, just let them freely conduct business; he concluded: “The wealth of each country is
achieved not by strict regulations of the State, but by freedom of business”.
The “visible hand” is the State’s intervention and regulation of the market through
mechanisms, policies and tools for macroeconomic management, such as fiscal policy,
monetary policy, foreign trade policy, and income policy. The process of regulating the
economy of every country is operated by both “visible” and “invisible” hands. That is, the
State intervenes but must also respect the “invisible” hand of the financial economy for it to
develop.
It is impossible to say which hand is stronger than the other. Because each has its own
advantages and disadvantages. Depending on the pulse of the economy, there will be
appropriate adjustments.
Question 4. The equilibrium of the free market maximizes social efficiency, why does the government
always intervene in the economy?
The free market will automatically balance and adjust its efficiency, but if the efficiency in a
certain area is still talking about the efficiency of balancing the national market, the free market
equilibrium will not reach the equilibrium of national efficiency.
For example, in remote areas, the competitive market will never be balanced by itself because
investors do not come to invest in jobs for the people. In a competitive free market, their tendency
is their own interests, towards their own interests; they look for places that can bring them
benefits, and they do not come to places that do not bring them benefits. Thus, the government
must intervene, influence with many policies to attract them (building roads, building electricity,
building seaport systems, infrastructure systems, tax incentives, etc.) so that investors will come to
make the difficult areas develop more, the efficiency of the country and the whole society will
develop more. The government must intervene to ensure that all regions enjoy the common
benefits and efficiency, bringing fairness to society.
Question 5. In each of the following areas, give some examples, if possible, of the Government's
involvement as a producer, regulator, or purchaser of goods and services for direct distribution to
individuals or for government use: 1 - Education; 2 - Transportation; 3 - Credit markets; 4 -
Housing.
1. Education: The government implements the curriculum or lets the private sector build schools
and hire teachers. The government acts as a regulator; the government pays for the private
sector to train teachers.
2. Transportation: The Government assigns to the private sector to collect fees, while controlling
the issue to ensure timely collection of fees.
3. Credit market: This mechanism is decided by the private sector, between lenders and
borrowers; the State only intervenes in the interest rate to adjust (monetary policy); provides
credit for special subjects such as student support.
4. Housing: The State allows the private sector to stabilize investment for the people, the State
does not intervene; however, the private sector's housing prices are increasing day by day (due
to the monopoly of speculative classes pushing up housing and land prices, causing social
insecurity. Therefore, the State intervenes, introducing policies for society (the State buys
commercial housing from companies and then rents it to ministries, state employees at low
prices for about 50 years). Policies ensure fairness for income; or the State builds social
housing, reduces taxes, and exempts taxes for people to buy with acceptable income.
Question 6. State the manifestations of failure of the market economy in recent times in Vietnam
and the implementation of the function of public finance in resolving those failures of the
?
government?
The manifestations of failure of the market economy in Vietnam in recent times can be listed as
follows:
1. Uneven development: Regions and areas develop unevenly, with clear differences between
regions.
2. Gap between rich and poor: The gap between rich and poor is growing and is not being
controlled.
3. Unemployment: Unemployment is high, especially among young graduates.
4. Living environment and production pollution: Living environment and production pollution
are serious, especially in big cities.
Functions of public finance:
First, ensure financial resources for the state
Second, reallocate resources, improve economic efficiency, ensure social equity through
compulsory revenues and reflect public spending on targets.
Third, Macroeconomic regulation such as: Rapidly increasing GDP growth rate, Increasing
employment and reducing unemployment; stabilizing prices, Implementing exchange rate
regulation policies...
4th: Inspection and supervision: Inspect the collection planning process; compliance with the law
in the process of using public financial resources;
CHAPTER II: ANALYTICAL TOOLS
Question 1. The following statements are positive or normative (normative) views?
1. The minimum wage should not be set too high because it will increase unemployment.
Subjective assessment: normative
2. How high is inflation acceptable?
Pose a problem, and ask for a certain level of response Subjective Normative
3. How will the increase in gasoline tax affect gasoline consumption?
Note the word "will be" which is a Positivist argument.
4. What percentage of the budget should defense spending take up?
Standard (same as sentence 2)
5. The recent increase in the cost of living has caused the real income of the people to decrease.
Objective theory, based on empirical reality
6. Should medical examination and treatment for the elderly be fully subsidized?
Standard
7. To what extent should the government intervene in the economy?
Give specific answers Subjective Normative
8. What is the appropriate income level to start taxing income?
Standard
9. Oil prices in the 2000s doubled compared to the 1990s.
Empirical
10. People with higher incomes will be distributed more goods.
Standard
11. In the early 90s, the unemployment rate in our country increased dramatically.
Empirical
12. Smoking is not beneficial to society and should not be encouraged.
Empirical
13. The government needs to adopt economic policies to reduce unemployment.
Standard
14. To improve the living standards of the poor, the government needs to increase subsidies for
them.
Standard
Question 2. Like economists, astronomers generally cannot conduct controlled experiments. Yet
astronomy is still considered a more exact science than economics. Why?
Like economists, astronomers generally cannot conduct controlled experiments. However,
astronomy is still considered a more exact science than economics. Astronomy uses observational
methods to collect data. The data is collected through measuring devices or telescopes and then
analyzed using mathematical and physical tools. And the results of empirical evidence in
astronomy are objective. Therefore, the results of astronomy are based on data that is collected
and analyzed in a precise way, and can be checked by other scientists. In economics, data is usually
collected from surveys, investigations or financial reports and is often studied about human
behavior and emotions. However, because of the many different factors that affect the results, the
results of economics cannot be like scientific experiments that are simpler and easier to test.
Another answer: Astronomy experiments are natural objects, not affected psychologically, while
economics experiments are human objects that depend on psychological developments and
moods.
Question 3. During the 2000 election campaign, George W. Bush proposed cutting marginal income
tax rates. Explain why it is difficult to determine the impact of tax cuts on labor supply based on
theory alone. What type of empirical research would help you make your prediction?
+ It is difficult to determine the impact of tax cuts on labor supply based on theory alone because
each person will have an income or substitution effect depending on their circumstances. Income
effect: due to reduced income tax, increased income, people will reduce working hours and tend to
consume, rest more, work less. Substitution effect (the effect of making consumers change the use
of products): if taxes are low, people will work more to create more income.
+ Interview research is used to determine the response to the application of a reduction in
marginal income tax rates and econometric models can be applied to measure the impact data.
Question 4. At the International Cancer Conference held in Atlanta. The main source of controversy
was the effectiveness of high-intensity chemotherapy after bone marrow transplantation as a
treatment for severe cases. Relate the problem faced by medical researchers in determining the

ff i f d ih h h bl f db i i
effectiveness of one treatment compared with another to the problem faced by economists in
determining the impact of economic policies.
+ The problem that medical researchers face in determining the effectiveness of one treatment
compared to another is that it is easy to test different treatments for the same disease, and which
treatment is better can be tested over a short period of time. As for the problem that economists
face when determining the impact of economic policies, it takes a long time and is risky to test
over an economic cycle.
Question 5. In the 1970s, researchers at the RAND Corporation conducted a social experiment to
study the relationship between health insurance coverage (purchase) and health care utilization. In the
experiment, a group of people were encouraged to exchange their regular insurance policies for new
RAND policies that had different coinsurance rates (i.e., new policies under which different rates of
health care costs would be paid by the insurance company). In 1993, the Clinton administration used
the results of the RAND experiment to predict how health care utilization might increase if coverage
were expanded. What problems might arise if the results of social research were used to predict the
impact of nationwide coverage?
In 1993, the Clinton administration used the results of the Rand experiment to predict how health
care utilization might increase if insurance coverage were widely implemented. The problem that
could arise if the results of social research were used to predict the impact of nationwide coverage
is that the RAND New Deal social experiment was only applied to a small group of people. If the
results of the social experiment were applied widely, the actual results of each region would not
follow the same trend as the experimental results. Because each region has different socioeconomic
conditions and living standards, or the experimental group may not be representative of the whole
multiracial and geographically diverse society like the United States.
Question 6. Each student chooses a case study using an empirical method (Social Test, Interview &
Econometrics or a combination of methods) to evaluate public finance policies (spending, tax/fee
collection and borrowing…)
Social test:
For example, design an online or paper survey of people's opinions on public spending policies in
their area. The survey might ask about their satisfaction with the current use of public funds and
their views on future spending, while considering different government priorities.
Interview:
For example, interviews could be conducted with a number of public finance officials to gain a
more detailed understanding of the public budgeting process and how they evaluate the
effectiveness of expenditures. Questions could be asked about tax collection mechanisms, priority
issues in the budget, and barriers that need to be overcome to achieve the government's objectives.
Econometrics:
For example, economic and social data can be used to assess the impact of government spending,
taxes/fees or borrowing on the economy and on people's welfare. For example, you can compare
the rate of economic growth after a government implements a new borrowing policy with previous
years or find out the impact of raising taxes to the highest possible level on reducing consumption
from people.
Combination of methods:
For example, you might design a survey to collect public opinions on a policy and then use
econometric methods to analyze the results. Or, you might use interviews to cross-reference
information with economic and social data to assess the feasibility of public finance policies.
CHAPTER 3: PUBLIC GOODS
DISCUSSION QUESTIONS
Question 1: Consider the characteristics of public goods. What are the characteristics of
loudspeakers and highways?
Public goods have two characteristics:
+ Non-rivalry: An individual can consume a good without reducing the availability or benefits of
that good to other consumers.
+ Non-excludability: Cannot prevent others from consuming or receiving the benefits of the
goods.
Radio: Only those who have a radio device can listen to the radio, so the radio is a non-pure
public good, with non-rival characteristics, because one individual often consumes the good
without reducing the presence or benefits of listening to the radio for other listeners.
Highways are not pure public goods because they are goods of common consumption, used
by many people and not contested.
Question 2: Distinguish between pure public goods, limited public goods and priceable public goods.

Pure public goods Limited public goods Priceable public goods

There is competition.
Can be excluded
These are products or services These are products or services
produced or provided by produced or provided by state
Non-rival
Non-exclusive government agencies, but are agencies, which can be priced
limited in quantity or scope of based on cost or market price.
For example, railways, roads, use. For example, vaccines, For example, gasoline,
electricity, water, etc. Pure public antidotes, etc. These goods are electricity, water, etc. These
commercial and sold on the goods are commercial, sold on
goods are non-commercial,
the market and make a profit,
cannot be sold and do not market, but there are limitations
but the price is regulated by
generate profit. in production and distribution.
state agencies or adjusted to
ensure fairness and
compliance with legal
regulations.

Question 3: Are radio waves and highways public goods? Is watching the international fireworks
display in Da Nang a public good? Why do people still pay to watch fireworks?
Radio waves and highways are public goods because they have characteristics that benefit an
individual or group, everyone can use them without reducing the presence of Radio waves and
highways for others. And they do not have to pay, cost to use it. Moreover, they cannot prevent
others from using its benefits.
Watching fireworks in Da Nang is considered a public good, in which the shooter is only limited
to a certain number of times without having to pay a fee, so there are still people who pay to
watch fireworks because they want to reach their ultimate satisfaction.
Question 4. Please classify the following goods and services: Public goods? Private goods? Why? a.
Wastelands; b. Prisons; c. Medical school education; d. Public TV programs; e. Internet website
providing information about airline schedules; f. Urban water supply.
Public goods: Wastelands, prisons, medical school education (pure), public television programs
(pure), Internet web sites providing information about airline schedules.
Private Goods: Urban Water Supply.
Question 5. What are non-excludable goods? There is a view that the private sector produces few non-
excludable goods. Please comment on this issue.
Non-excludable goods are goods or services that cannot be prevented from being consumed by a
consumer without paying for them or participating in the production process. This means that
once one person has used or consumed the good, another person can also use or consume the
good without reducing the utility of the first user.
It is true that the private sector produces fewer non-excludable goods. The reason is that private
enterprises mainly want to make profits for themselves, if they produce non-excludable goods, it
will lead to the phenomenon of "free riding", meaning that some people use the common public
benefit but do not contribute to the cost with others, leading to a decrease in the company's
revenue and affecting other consumers. Therefore, private enterprises produce fewer non-
excludable goods than public or international enterprises.
However, this view has some limitations. Some products are not excludable but are produced by
private enterprises. Examples include open source software products, music and videos shared on
the Internet. In addition, there are also private enterprises that produce highly excludable products
(such as cars) but contribute to reducing environmental pollution or improving people's quality of
life.
Therefore, it cannot be affirmed that the private sector produces few non-excludable goods is
completely right or wrong, this depends on each specific case.
Examples of nonexcludable goods might include air in public spaces, parks, online materials, and
public media channels.
Question 6. What are the measures for the government to influence the provision and use of public
goods?
1. Promote the participation of the non-state sector in the provision of public goods
By transferring the provision of public goods to the private sector, the state can use competition
between service providers to obtain the most efficient service provider. Therefore, promoting
competition in service provision between the public and private sectors is a goal that many
countries are aiming for in order to improve the quality of service provision. Using the market to
provide competitive services will reduce costs and improve service quality, share the burden of the
state and move towards building a cooperative relationship between the state and the market.
Thus, in promoting competition, the state's activities are not simply regulating but also
encouraging and creating market incentives. The government creates a level playing field for all
entities capable of providing public services to create healthy competition between service
providers and consumers of public services who have the right to freely choose service providers.
Competition has forced service providers to constantly innovate and that benefits both the people,
the state and service providers.
2. Improve the quality of public goods provision in state services
An important issue that needs to be noted first in order to improve the quality of services in the
public sector is the human factor. Many countries have focused on many measures to improve the
professional capacity of civil servants through improving personnel work and encouraging the
participation of civil servants and management activities, enhancing the rights and personal
responsibilities of the recruitment and promotion methods based on the qualities that the state
hi h h d h i il i h hi h li ff f ddi i
uses, which has made the civil service apparatus have a high-quality staff force. In addition to
improving the professional capacity of the civil servants directly implementing the provision of
public goods, special attention should be paid to improving the ethical quality of customer service.
Experience from many countries shows that a civil servant who is conscious in his work and has a
dedicated attitude towards serving customers will have a significantly increased work efficiency.
3. Strengthen community participation in policy making and ensure public service quality
This participation process is manifested in many different ways, from self-consultation,
information exchange, to direct citizen participation, proactively proposing initiatives or giving
suggestions and policies. Especially in places where the provision of goods is ineffective, people
can inform the authorities at all levels about this issue and pressure them to improve. Therefore,
public agencies are forced to be more responsible in listening to the voices of the people and
responding promptly and fully to those requests. This feedback mechanism helps two-way
information to be shared and shared. Through this, people and service providers have the
opportunity to evaluate and exchange opinions to improve the quality of services.
Question 7. What is your view on charging for the use of purely public goods?
There is a view that charging for the use of pure public goods is a way to finance the production
and supply of public goods effectively and ensure the sustainability of public goods projects. This
charging can also be a way to control the use of public goods, especially in cases where resources
are overused or not protected. On the contrary, the consequence of charging will be to discourage
individuals from using those public goods and lead to those goods not being fully exploited,
reducing social welfare. Therefore, charging for use is still not advisable, the cost of paying for
public goods must be based on the community awareness and generosity of users.
Question 8. The city government plans to build a pedestrian street. The benefits given to convince
residents to agree to this project are: (1) more people will walk, (2) less traffic jams, and (3) 15 jobs
will be created. Do you agree with this opinion?
Question 9. Explain why the provision and use of public goods can be subject to free-riding? There is
an opinion that: “The State does better than the private sector in providing public goods”. Do you
agree with that opinion? Why?
Free riding or “free riders” occurs because public goods are non-rival and non-excludable, so
everyone can use them. These people enjoy the benefits of public goods without participating in
the costs necessary to provide the goods or bearing the costs less than the benefits they receive.
Also because their use of public goods is not hindered by anyone and the cost to consumers is
usually zero, this situation arises.
I agree with the above opinion because the goal of the private sector is to seek profit, create added
value for the organization, and providing public goods to make profit is very difficult. If public
goods are provided by the private sector, they do not have enough tools and sanctions to force
users to pay. For that reason, the private sector is often not interested in the fields of operation in
the public sector, whose products are often provided to society as public goods, although the laws
of those countries still recognize and encourage private sector enterprises to have the right to
invest and provide. Therefore, the public sector must play the role of providing public goods and
collecting contributions through taxes.
Question 10. People in Da Nang city usually contribute to build 120km of road in 1 year. After the
city government spent its own money to build 100km of road each year, people reduced their
contribution to 30km. What happened? Explain?
Question 11. Give an example of free riding in your locality. What has the local government done to
address this problem?
An example of a non-paying beneficiary at the local level would be people who use parks, sports
facilities and other public amenities for no or very low fees, and who do not contribute to the

i f bli f ili i hi l i d l l d
construction of public facilities. This results in overuse and causes local governments to spend
more on maintenance, cleaning and upkeep of these facilities.
To address this problem, local governments can impose measures such as charging fees to enter
these areas, increasing the price of admission to parks and sports facilities, or creating restrictions
on the use of public facilities. In addition, governments can also invest in education and advocacy
campaigns to increase public awareness of the importance of paying fees to maintain public
facilities.
Question 12. The government has proposed that private enterprises manage a part of the national
highway through some provinces, be allowed to collect tolls and use that money to repair and
maintain the road. Do you think privatization in highway management is a reasonable idea?
The proposal to privatize the management of part of the national highways can be considered a
reasonable idea for the following reasons:
+ Reduce financial pressure on the state budget: Managing and maintaining a large number of
national highways will cost the state budget a lot of money. Therefore, sharing some of these costs
with private enterprises can reduce financial pressure on the state budget.
+ Improve the quality and efficiency of management, create conditions for the private sector: Private
enterprises have experience in managing and operating infrastructure. Hiring private companies to
manage and maintain national highways can improve the quality and efficiency of their management.
+ Increase competitiveness and investment capacity: Allowing private enterprises to manage national
highways can create competition among them, increase investment capacity and promote economic
development.
+ Reduce the phenomenon of “free riders”: Road users will have to pay a surcharge to fund road
maintenance, reducing the situation of beneficiaries not contributing.
Question 13. List the types of pure public goods and impure public goods. In your opinion, which
public goods can be transferred to the private sector for efficient provision? Explain.
+ Pure public goods:
Defense goods, national security protection.
Public services such as recreation, education, public health, roads, public transportation, fire
protection, disaster prevention, and public administrative services.
+ Non-pure public goods:
Goods produced from natural resources such as electricity, water, gas, petrol...
Public services are provided under contract such as: hospitals, schools, garbage collection,
environmental sanitation, quality testing...
CHAPTER 4: EXTERNALITIES AND GOVERNMENT EXTERNAL POLICIES
Question 1. Can an action create both positive and negative externalities? Explain?
An action can create both positive and negative externalities because it affects many different
subjects, and many of those subjects have different purposes, so for one subject it is positive
but for another it can be a negative externality. For example: building a factory to produce
electricity can help meet the increasing demand for energy, but it causes environmental
pollution and affects human health. Or for example, Mr. A uses pesticides to kill insects,
creating a positive externality of killing insects, but the pesticides fly to Mr. B's field and seep
into the water, leading to the fish pond of person B raising fish, which is negatively affected.
Question 2. What measures does the Government use to influence positive externalities? Negative
externalities?
+ Negative externalities:
Taxation - Pigouvian tax: is a tax levied on each unit of output of the firm causing negative
externalities, so that it is exactly equal to the marginal external cost at the socially optimal
output level. It is difficult to determine the tax rate, then switch to indirect taxation. (Excise
tax)
Subsidies: In the condition that the number of people causing negative externalities is fixed,
subsidies can be given to reduce the level of negative externalities. Apply restrictions
(sedentarization).
Creating a market (for environmental pollution): auctioning pollution permits, also known as
discharge permits.
Set regulations and sanctions: each polluting company will be required to only pollute at a
certain level, called the emission standard, or else it will be forced to close.
+ Positive externalities:
Subsidies: Subsidies can create a tax burden
Sponsor and encourage businesses and organizations to create positive externalities
For example, governments have often subsidized positive externalities by providing certain public
services at prices below the marginal cost of providing them. For example, many municipal waste
collection companies collect municipal waste, but residents pay a sanitation fee that is lower than
the actual cost of operating the waste collection system. The difference is covered by the
government – ​a form of subsidy to reduce the accumulation of waste that causes public
unsightliness. However, when governments intend to subsidize positive externalities, there are a
few points to keep in mind: In one way or another, subsidies create additional burdens for
taxpayers. Therefore, providing subsidies creates a redistribution from taxpayers to recipients.
Therefore, both efficiency and social equity impacts need to be considered.
Question 3. Can the government grant property rights to internalize the externality? Compare this
solution with direct government intervention.
There will probably always be “free riders.”
The government grants ownership rights but those individuals and businesses do not have
strong enough sanctions.
Question 4. Give examples of negative and positive externalities in public projects. Describe the
externalities of a specific project and how to measure externalities. Evaluate the effectiveness of a
specific public policy through learned theories, described through graphs.
*Examples of negative and positive externalities in public projects:
+ Negative externalities:
Impact on the environment, such as exploitation of natural resources, ecological destruction
and environmental pollution.

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Impacts on local communities, such as reducing farmers' land area or causing noise and dust
to people living near roads.
+ Positive externalities:
Improve traffic conditions, making travel between the two cities more convenient, reducing
traffic jams and traffic accidents.
Create opportunities for local businesses to grow, such as freight transport and tourism-
related services.
Question 5. For each of the following cases, which case can the Coase Theorem be applied? Why and
why not?
a. A group of college students in a dormitory share a communal kitchen. Some students never
clean up after they cook. Not applicable, because the CP cannot grant a license to the students to
use the kitchen because the students are just tenants, and may not stay long-term.
b. In the Vermont lake area, high-speed motorboats cause discomfort to swimmers and boaters.
Applicable, because CP can transfer ownership of this lake area to a resident for management,
limiting negative factors.
c. In Washington State, many farmers burn their fields to clear stubble for the upcoming planting
season. Residents in nearby cities complain about pollution.
Not applicable, as there is nothing to assign ownership to.
Measures: make regulations, conventions, and rules
d. Internet users generally incur zero costs to transmit information. The result is congestion and user
frustration due to delays. Applicable, because the government assigns ownership of the internet
connection to individual households.

CHAPTER 5: INCOME REDISTRIBUTION


DISCUSSION QUESTIONS
Question 1. What do you understand by fairness? Inequality in income distribution? A measure of
income inequality in a country? Describe with a graph.
Economics views equity from the perspective of sharing benefits and costs among individuals in
society. On that basis, equity is understood in two aspects: horizontal equity and vertical equity.
Horizontal equity is understood as the equal treatment of people with the same initial condition.
For example: Same medical condition, same treatment; Same ability to pay, same contribution;
Two people A and B working in the same industry, same seniority, both have an income of 20
million VND/month, will be subject to the same personal income tax.
Vertical equity is understood as the unequal treatment between members with different initial
statuses in the direction that those with better conditions will enjoy more social benefits or have to
bear more social costs than others. For example: Different health conditions will be treated
differently; Different payment capacity will have different contributions; Two people A and B
work in the same industry with the same seniority but A has an income of 20 million/month and
B has an income of 30 million/month, then they will be subject to different personal income tax
rates.
Income inequality is a large difference in the distribution of income, with a large portion of the
total income in an economy being concentrated in the hands of a small proportion of the
population. When income inequality occurs, there is a large gap between the assets and wealth of
f h l i d h h b i b i f d i i
one segment of the population compared to another. The basic basis for studying income
inequality and income disparities is the distribution of income by demographic segment. The
different types of income segments studied when analyzing income inequality may include
distributions for: Males vs. females, ethnicity, geographic location, occupation, past income.
Question 2. Are the concepts of equity and equality in income distribution synonymous? To what
extent is income inequality consistent with equity? What implications does your answer have for
government spending policy?
Fairness and equality in income distribution are not synonymous. Inequality is a large difference
in income and utility, while fairness represents the distribution of income according to ability,
capacity and work results. Each person's ability and work results may be different, so income will
be different. If there is too much difference, it will lead to great inequality. However, to be equal
will be leveling, not stimulating work motivation and creative intelligence. Thus, fairness is
different from equality. There are many different views on fairness and inequality. Some believe
that we should only create equality in equal opportunities for everyone, others believe that some
special goods should be distributed fairly according to the point of view of equality. However,
fairness and equality are related to each other and when there are equal opportunities, equal
income and utility, equality in income is consistent with fairness. Income inequality is consistent
with equity when marginal utility is the same even though income may be different (at the point
where marginal utility is equal welfare will be maximized).
For example, when governments invest in education and public health to provide everyone with
similar amenities and opportunities, this can create equality in individual opportunities and
contributions, and encourage fairness in income distribution.
Question 3. Analyze why the government must redistribute income in society.
Income distribution is an important issue in today's society. In a society, income disparities
between different classes of people can cause inequality and affect the development of the country.
Some of the main reasons why the government has to redistribute income in society include:
1. Reducing inequality: When some people earn more than others, this can cause inequality and
tension in society. By redistributing income, the government can help reduce disparities and
ensure that everyone has the opportunity to thrive and live a better life.
2. Increased motivation to work: When one person working receives a higher income than
others, this can lead to a loss of energy and motivation for others to work. When the
government redistributes income, people will have more motivation to work to improve their
circumstances.
3. Boosting Economic Growth: Income redistribution can also help boost the economic growth
of a country. When people have a stable income, they will be able to spend money on
products and services, thereby boosting economic growth.
4. Ensuring national security: If some people earn more money than others, this can cause
tension and crisis in society. When the government redistributes income, it can help ensure
stability and security in the country.
In short, income redistribution is an important measure to reduce inequality, increase labor
motivation, promote economic development and ensure national security. The government needs
to adopt reasonable policies to ensure that everyone has the opportunity to develop and live
better.
Question 4. Analyze the opinion that redistribution to ensure social equity will reduce the efficiency
of the economy. What is your opinion?
In my view, redistribution to ensure social equity does not necessarily reduce economic efficiency.
In fact, redistribution can help increase equity and protect disadvantaged groups in society, while
improving economic efficiency.
For some, redistribution can be stressful because it appears to be taking away from the rich to give
to the poor. However, redistribution can be achieved through measures such as wealth taxes,
general income taxes, or other means to reduce financial disparities and increase resources for
di d d fd l di ib i i h li i di i f
disadvantaged groups. If done properly, redistribution can improve the living conditions of poorer
people, reduce inequality, and increase consumption and economic activity.
In addition, redistribution can also increase economic stability. When a large number of people
have low incomes and are unable to consume products and services, this can cause an economic
crisis. However, if these people are supported through distribution policies, they can consume
more and contribute more positively to the economy.
In short, redistribution to ensure equity and protect disadvantaged groups does not necessarily
reduce economic efficiency. Appropriate redistribution measures can help increase equity and
economic stability while protecting disadvantaged groups in society.
Another opinion: According to this opinion, to achieve efficiency, one must accept inequality and
conversely, to ensure fairness, one must sacrifice efficiency to some extent. The reasons are as
follows:
- The redistribution process generates administrative costs, mistakes in selecting objects,
loss due to corruption, waste...
- Reduces work motivation for people with regulated income, reduces accumulation and
concentration
capital
- Create a sense of dependence on the distributor.
Question 5. Consider the following government programs:
a. Subsidies for companies in the biotechnology sector;

b. Buy Patriot missiles for the air force.


How might each program affect income distribution?
Subsidies for biotechnology companies only create benefits for the companies and biological
products can be discounted, consumers of these products can benefit. However, in society, not
everyone has the opportunity to enjoy this benefit or enjoy it equally. On the contrary, when
buying missiles for national defense security systems will create pure public goods, everyone enjoys
the same security services, the distribution of income in this case is fair and equal.
Question 6. Forms of subsidies that the government can apply. List some positive points and
limitations of each form.
1. Unemployment benefits
Positive points: Support workers when they lose their jobs and have no income to sustain their
lives.
Limitations: Some people may abuse the benefits and be reluctant to find new jobs, reducing their
motivation to look for work.
2. Subsidies for the elderly, children and disabled
Positive points: Helping vulnerable groups in society, ensuring the rights of the elderly, children
and people with disabilities.
Limitations: The cost to the government of maintaining this subsidy program can be very high
and put a strain on the budget.
3. Subsidies for the poor and poor households
Positive points: Helping the poor and poor households overcome difficulties in life, ensuring their
rights.
Limitations: Some people may abuse the benefits and not want to find work to support
themselves.
4. Education allowance
Positive points: Helping pupils and students have access to education and training, creating
conditions for them to develop their personal potential to the fullest.
Limitations: The cost to the government of maintaining this subsidy program can be very high
and put a strain on the budget.
Question 7. List some measures the government can use to reduce the gap between rich and poor.
What are the advantages and disadvantages of each measure?
1. Educational support
Advantages: Helps children learn and develop themselves, can create equal opportunities
between rich and poor families.
Disadvantages: It takes a lot of money to create facilities and train quality teachers.
2. Improve the income of the poor
Advantages: Create opportunities for the poor to better support themselves and their families,
while reducing income disparities between classes.
Disadvantages: The cost to the government of improving the incomes of the poor can be very
high and put pressure on the budget.
3. Building new residential areas and clusters
Advantages: Create new opportunities for people, boost economic development and reduce
infrastructure gaps between regions.
Disadvantages: The cost of building new areas can be huge.
4. Implement tax policy
Advantages: Tax policies can encourage the rich to spend on production, expand their
businesses or invest in new projects, helping to create more job opportunities and improve the
incomes of the poor.
Disadvantages: Need to ensure that tax policies do not add burden to the rich and do not
reduce the attractiveness of the business environment.
Question 8. Consider an economy with two people, Henry and Catherine. They consume two goods,
bread and water. Suppose that, because of a drought, the government decides to allocate exactly half
the available water to each person. To prevent people from “exploiting” others, no one is allowed to
trade water with anyone else for bread. Construct an Edgeworth Box to represent this situation and
explain why it is usually not Pareto efficient.
Suppose that at point v, the utility of Ca and He is maximized. Since water is scarce, He can only
use water at point a and Ca at point b (each person only gets half of what they need). The
indifference curves of He and Ca are both downward-sloping and moving in opposite directions,
they cannot touch each other so there can be no geometrical contact, so it is inefficient. On the
other hand, in this case, water cannot be exchanged, the allocation does not make anyone better
off, both people are worse off, it is not Pareto efficient (one allocation makes another person better
off and the other person is worse off).
Question 9. A Yale University psychologist once proposed that the government impose a tax on
“foods with low nutritional value. Fatty foods should be rated according to their nutritional value per
calorie or per gram of fat; the least healthy foods should be taxed at the highest rate” (Brownell,
1994, p. A26). How does this proposal relate to the concept of “Recommended Goods”?
Promotional goods are goods that society thinks people should consume or receive regardless of
their income. Food is a promotional good, and high taxes on unhealthy food are to protect
consumers. The government intervenes by taxing unhealthy food to encourage people to consume
healthier promotional goods.
Question 10. In each of the following cases, please explain the government policy reasonably on the
basis of welfare economics?
a. In Michigan, when ice fishermen get into danger, the coast guard rescues them for free.
b. Honey production is subsidized by the federal government.
c. The U.S. Department of Agriculture subsidizes crop insurance for farmers. Farmers pay zero
premiums to cover loss of production due to natural disasters.
d. In Washington DC, you cannot work as a barber unless you are licensed by the city
government.
The government should only intervene when initial assistance is needed, and then let people trade freely. Cases a and c
require government assistance because there is no market for risks caused by natural disasters, or there is an inefficient
market for natural disaster risk insurance. Cases b and d should be left to operate with competition to ensure efficient
resource allocation.

CHAPTER 6: TAXES
DISCUSSION QUESTIONS
Question 1. Analyze the nominal tax burden and the real tax burden in the following cases:
taxes in Vietnam.
In taxes in Vietnam, they are often divided into two types: nominal tax burden and actual tax
burden.
1. Nominal tax burden
h l l db d h ib d b l f h i i di id l
Is the amount calculated based on the tax rate prescribed by law for each unit or individual
with tax payment obligation.
This is the amount determined before the tax payment is made.
For example, a value-added tax (VAT) at a rate of 10%, where the nominal tax burden is 10%
of the value of the product or service.
2. Actual tax burden
The actual amount payable after deducting tax reductions, tax exemptions, tax credits or
other supports.
This is the actual amount payable after recalculation.
For example: Personal income tax (PIT) for civil servants and public employees with specific
deductions, after deductions, the actual tax rate will be obtained.
Question 2. Give an example to prove: Discriminatory tax on a type of goods and services
services have an effect on non-taxable goods and services. Is this effect positive or negative in the
sense of Pareto efficiency?
An example of differential taxation of a single good or service could be taxation of
cryptocurrencies such as Bitcoin or other digital currencies. In this case, taxing only
cryptocurrency transactions would affect the attractiveness of these transactions compared to
other means of payment such as cash or credit cards.
The impact of differential taxation on cryptocurrency transactions could be positive if the income
from these transactions is used to reinvest or develop new technology in the cryptocurrency sector.
However, this unfair and biased taxation could also cause a negative Pareto effect because it would
cause cryptocurrency users to switch to other means of payment to avoid taxation. This would
reduce the popularity of cryptocurrency and affect the revenue of companies in this sector.
Question 3. In which cases does the state tax increase not affect the economy?
affect supply output? Use graph to prove? Should the government then continue to increase taxes to
increase budget revenue? Why?
Case: is when the demand of the product is not met by the change in price. This means that
consumers will buy the product at a higher price without caring about the increased cost due to
the tax increase. At this time, the government should not increase taxes to collect revenue because
increasing taxes can lead to a decrease in supply and thus reduce the total tax revenue of the
government.
Question 4. Explain how individual behavior is influenced by characteristics.
following of the tax law:
a- Charitable donations are deductible from taxable income.
This feature of the tax law may lead to individual behavior of supporting and participating in
charitable activities to minimize the amount of tax payable. People who are inclined to minimize
the amount of tax payable may use financial donations to charitable activities as a way to
minimize their taxable income.
b- Beer is subject to special consumption tax
This tax may result in reduced beer consumption by some individuals, particularly those with
lower incomes. Consumers may switch to other beverages or reduce the amount of beer they
consume to avoid the significant tax cost. However, higher income consumers may not be
significantly impacted by the tax cost and will continue to consume beer as usual.
c- Interest on borrowed capital is taxable
This tax law feature may lead to careful consideration before borrowing money to avoid higher
taxes. Those planning to borrow money can use tax-related information to calculate the amount
f di i h d b h ill h id d i h
of tax expense and its impact on the debt they will repay. They may consider reducing the amount
of the loan or looking for other solutions such as increasing their income to deal with this tax
expense.
Question 5. Propose a tax/subsidy policy for a type of externality in Vietnam.
The type of externality referred to is environmental pollution from industrial production activities.
1. Tax Policy: For domestic and foreign enterprises that cause environmental pollution in
Vietnam, we propose to impose an environmental tax. The tax will be calculated based on the
amount of emissions, waste, water and soil pollution, and will be calculated as a percentage
of the value of the product. Enterprises can save on tax costs by investing in greener
technologies and reducing pollution.
2. Subsidy Policy: We propose financial support for domestic enterprises developing
environmental treatment technologies and renewable solutions. Subsidies may include both
capital investment and tax reduction. Enterprises that already have modern environmental
treatment technologies will be exempted from environmental taxes.
In summary, our proposed tax/subsidy policy will encourage domestic and international
enterprises to invest in greener technologies to reduce environmental pollution externalities in
Vietnam. At the same time, this policy also helps protect the environment and health of
Vietnamese people.
Question 6. One reason for imposing a tax on alcohol consumption is that people who drink alcohol
create negative impacts on the rest of society - for example through
disorderly behavior or drunk driving. If this reasoning is correct, without government taxes, would
people tend to consume too much, too little, or the right amount of alcohol?
The above rationale for imposing a tax on alcohol consumption is correct and well-founded.
Without government taxes, people could consume too much alcohol without worrying about the
price or the negative consequences of excessive drinking. However, this depends on the individual
and the specific situation. For those who love alcohol, imposing a tax will only increase the price
of alcohol and affect their personal budget, but will not necessarily make them consume less. On
the other hand, those who do not care about the price of alcohol or are unaware of the negative
effects of excessive drinking may consume too much alcohol, leading to unfortunate consequences
for themselves and society.
Question 7. What is a good tax system?
1. Fairness: The tax system should be designed to distribute the burden heavily towards those with
higher incomes, while minimizing the tax burden on those with lower incomes.
2. Efficiency: The tax system should be designed so that the taxes collected are sufficient to meet
government objectives, but not too burdensome for citizens and businesses.
3. Simplicity: The tax system should be simple and clear, easy to understand and easy to implement to
avoid inconvenience and cost to taxpayers.
4. Encouraging economic activity: The tax system should be designed to encourage economic activity
and encourage investment, as well as maintain economic competitiveness and growth.
5. Flexibility: The tax system should be flexible enough to adapt to changes in the economy and other
public policies.
6. Transparency: The tax system must be designed based on a clear strategic direction for a relatively
long period of time regarding the collection rate, clearly showing the policy of encouraging or
restricting certain sectors and fields and must be specified.
7. International practice and competitiveness: International practice reflects the degree of
correspondence with the tax systems of other countries in the world. International competitiveness is
reflected by the comparative tax advantage in attracting international resources compared to other
countries.

Question 8. Why is it said that studying the additional burden in the overall equilibrium makes the
tax picture less “ugly”? Give some examples.
Question 9. One of the characteristics of special goods and services is that their demand is less
sensitive to price. Does Ramsey's rule suggest that we should tax these special goods and services
high or low? Explain why?
Ramsey's rule suggests that goods with lower price elasticity should be taxed more. This applies to
both physical goods and services.
However, in the case of special goods and services, setting tax rates based on price sensitivity is
not the best option. Since the demand for these services is less price sensitive, high taxes will not
reduce the demand for them, but will only make them pay more. This will adversely affect people's
comfort and may reduce the demand for these services.
Question 10. Considering the local environment, indicate the scope of tax impact in
the following cases:
a. The Ministry of Finance decided to increase the price of imported A95 gasoline by 2,000
VND/liter. Suppose the market
International gasoline market, no import quotas applied.
b. The Ministry of Labor requires businesses to increase the rate of health insurance contributions
for employees.
from 2% to 5%.
c. The government decided to increase taxes on resort villas in the area.
The impact of the tax increase on imported A95 gasoline will be concentrated on consumers in
the domestic market. Those who use imported A95 gasoline will have to pay more to buy gasoline,
which may lead to a switch to other fuels or a decrease in the consumption of imported A95
gasoline.
Health insurance taxes are calculated based on a percentage of an employee's income, so the scope
of the tax will affect both employees and businesses. Employees will have to pay more for health
insurance from the income they receive, while businesses will have to pay more for health
insurance for their employees.
Increasing taxes on vacation homes only affects those who own and use these homes. These people
will have to pay more in taxes to use and own these homes, which may lead to some people no
longer being able to afford to own or maintain their vacation homes.

Some questions from previous exams:


Question 1: Give examples and propose government policies on positive externalities (two examples)
and negative externalities (two examples) occurring in the production stage. To produce at socially
optimal efficiency, how should the producer carry out production when there are positive or negative
externalities or both occurring in the production process of the product?
Question 2: Please classify the following goods: pure public goods, impure public goods or private
goods. Explain your answer in detail.
Public television program
Website providing information about Vietnam Airlines' operating schedule
4-year program at University of Finance and Marketing
a/ Public television program:
– No competition: because having one more viewer does not affect others
– Non-excludable: because there is no charge, there is no payment
So public television is a pure public good.
b/ Website providing information about Vietnam Airlines' operating schedule:
– No competition: because adding one more person to watch does not affect others
– No exclusion: because entering the Website is free, no payment required
So the website providing information about the operating schedule of Vietnam Airlines is a pure
public good.
c/ 4-year study program at the University of Finance - Marketing:
– Competitive: because of competition for points to get into school, one more person being
accepted into the school will affect the admission of another person.
– Exclusionary: because tuition fees must be paid.
So the 4-year program at the University of Finance - Marketing is a private good.
Question 3: When the government imposes a tax on consumers, who will bear the tax economically?
Please explain specifically and illustrate with a graph.

Question 4: What are public goods? How many types of public goods are there, and give examples?
Explain in your own words which of the following goods are public goods (if they are public goods,
are they pure or impure public goods): (a) Lo Te - Rach Soi Expressway; (b) Vung Tau Lighthouse;
(c) Viettel ADSL line to people's homes; (d) Tickets to Suoi Tien tourist area; (e) Current Covid-19
vaccination in Vietnam; (f) Reading news online.

Public goods are: goods that have two properties: non-rivalry and non-excludability.
There are two types of public goods:

+ Pure public goods: Are goods that consumers can use for free and do not affect the use of
others. They have both non-rivalry and non-excludability properties. For example: street lights,
sky, public buildings,...

+ Impure public goods: Are goods whose use by one person can reduce the ability of another
person to use. However, these goods cannot be excluded. (Only one of the two goods above).
Example: Highways..

Pure public goods: (a) Lo Te - Rach Soi Expressway (b) Lighthouse in Vung Tau
Impure public goods: e, f

Question 5: What are externalities? (a) Give 3 examples of positive externalities and 3 examples of
negative externalities; (b) Are there any cases where an action causes both positive and negative
externalities? Give an example to illustrate (c) To produce at socially optimal efficiency, how should a
producer produce when there are positive or negative externalities or both occurring in the production
process?

Answer: - When the activities of one entity (individual or business) directly affect the interests of
another entity in a way that does not go through market prices, economists call that impact an
externality.
(a) Positive externality: - Teachers who have been vaccinated against the flu will reduce the
probability of students getting the flu.

Building and operating an airport would benefit local businesses, as trade and mobility would
increase.
The government invests in building more highways, making travel faster.

Negative externalities: - Smoking in public places

Tissue paper factory discharges wastewater into the environment


The neighbor's restaurant sings karaoke loudly late at night, affecting the quality of other
people's sleep.

(b) An action that can cause positive externalities can also cause negative externalities because the
action affects many subjects with different purposes, it may be a positive externality for one
subject but negative for another. For example, the production of new phones with advanced
technology may have a positive externality of improving user experience because of better
functionality, but also a negative externality of creating a large amount of electronic waste,
polluting the environment and affecting human health.

(c) Increase the use of positive externalities and minimize negative externalities.

Question 6: The production or consumption process creates externalities. This is one of the reasons
why the government must intervene in the economy. Please give examples and comment on the above
issue.
Answer: An example of a negative externality in the production and consumption process is air
pollution caused by factories that produce toxic emissions, which have negative impacts on human
health and the living environment. Meanwhile, a positive externality could be the creation of
renewable energy, reducing emissions and waste.
This requires government intervention to impose environmental and occupational safety
regulations and standards, as well as environmental taxes to encourage companies and individuals
to use environmentally friendly methods and technologies. Governments can also play a role in
regulating business activities by monitoring production and consumption activities, penalizing
businesses that violate regulations, and providing incentives for those who use environmentally
friendly products.
Government intervention in this regard will help limit negative externalities and promote positive
externalities, creating a healthy working and living environment, contributing to improving
people's quality of life.
Question 7: Considering the reality at the local or national level, which public goods should be
performed by the private sector? Why? Why does the private sector rarely provide pure public goods?
Examples of public goods that should be provided privately might include:
Infrastructure construction projects: such as highways, Long Thanh airport, hydroelectric
dams... These projects require large investments and are highly risky. Implementing them by
the private sector can help increase competitiveness, reduce production costs and create
diversity in production.
Public services such as health care: Such as hospitals, medical centers... The private sector can
come up with innovative solutions and optimize productivity to provide better services to the
i
community.
Reasons why the private sector rarely provides public goods: The private sector has few
sanctions, unlike the public sector, so it is difficult to control; besides, providing purely public
goods is difficult to bring high profits to the private sector, and corruption or loss of resources
is likely to occur.
Question 8: Analyze why economists are interested in the issue of externalities in production? Give an
example of government policy to address the issue of externalities in Vietnam.
Economists are interested in the issue of production externalities because they relate to trade,
commerce, and investment between countries. Balancing externalities is important in maintaining
a country's economic stability, ensuring that production activities are not hampered by oversupply
or shortages of goods in the market, or by problems related to exchange rates, tariffs, and
economic policies.
For example, the Vietnamese government has implemented a number of policies to address
externalities in production. One of these is the Investment Promotion Program (IPP), established
in 2006. This program provides a range of benefits, including financial support, tax exemptions
and other incentives for investors in specific pre-determined manufacturing sectors, to attract
domestic and foreign investment.
Furthermore, the Government also applies tariff policies to protect domestic industries. For
example, in recent times, the Government has applied a number of import control measures on
pangasius, aiming to protect domestic producers from unfair competition from imported products
from abroad.
Question 9:
a. What externalities will the act of getting and not getting the Covid-19 vaccine create? Why?
Star?
b. In your opinion, what criteria should be used to arrange priority vaccination groups?
Covid-19 vaccine equitably?
Question 11:
a. State two attributes of the fire department and give examples.
b. Are prisons public goods or private goods?
c. There are countries in the world that allow private prisons. Do you think they should?
promote privatization of the treasury or not? Why?
Question 12: What is income distribution? How can the government implement income distribution?
Using simple utilitarian theory, describe the construction and meaning of the social welfare function.
What is the “maximum, minimum” criterion? What is the meaning of the social welfare function
according to this criterion?
Answer: Social income redistribution is the intervention of the State through legal regulations and
policies to mobilize and persuade people with high incomes to contribute to help the community and
people with low incomes with the State.
Social welfare function: W=F(U1, U2,…,Un). Meaning: When the welfare of someone in society
increases under the condition that other members maintain the same status, social welfare
increases. Income should be redistributed to increase general welfare.
Welfare function: W=min(U1,U2….,Un). Meaning: Social welfare is measured by the welfare of
the person with the lowest utility. Income must be redistributed to a level of perfect equality.
Question 13: It is argued that “To reduce unemployment, the marginal income tax rate should be cut
to increase the supply of labor.” Using the theory of labor supply, explain why it is difficult to
determine the impact of tax cuts on labor supply. Can empirical research be used to help you make
predictions based on the above argument? If so, what type of research is appropriate?
ANSWER: Cut income tax → after-tax wages increase → labor supply increases → unemployment
decreases (draw a graph). However, the theory of labor supply states that when tax rates increase, it
causes two effects: substitution effect and income effect: Tax reduces the price of leisure time, so
people tend to consume more of it Substitution effect; Tax reduces income, so people tend to consume
less leisure goods Income effect. The total impact of these two effects is not determined, so there is no
basis to conclude that increasing tax rates reduces labor supply, or in other words, there is no basis to
assume that reducing marginal tax rates increases labor supply. Econometric research or interviews
can be used to make predictions.
Question 14: Propose a tax/subsidy policy for a type of externality in Vietnam.
Answer: There needs to be solutions to promote the development of research activities in seed
selection, production, processing, preservation and supply to build an advanced Vietnamese seed
industry that can not only reduce imports but also export seeds to regional markets. One of the
necessary solutions is a suitable subsidy policy for plant variety research institutes and centers.
Question 15: Apply the general equilibrium model to analyze the scope of tax impact on one good
relative to another good.
Answer: If the tax on gasoline is increased, the price of gasoline will increase, causing people's
demand for gasoline to decrease. Instead of using motorbikes, people may switch to using public
transportation such as buses. In addition, when gasoline prices increase, it will affect the increase in
prices of transportation services, passenger cars, and lead to an increase in the prices of goods.
Consumers are affected by a decrease in income twice: once because the increase in gasoline prices
directly affects their use of vehicles, and once because the prices of transportation services and goods
increase.

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