Macro1 Essay Example | Topics and Well Written Essays - 1250 words

Macro1 - Essay Example pected benefits provided to other individuals who are not directly involved in the decision making process regarding production or the consumption of a good. The consumption of different goods by the consumers sometimes benefits them in terms of providing them spillover benefits. This applies to a situation in which people are given free education but they do not pay taxes in return, or there is not taxation system applied on them. This can sometimes be called subsidizing the people. The resulting misallocation or the reduction in Federal Reserve can only be corrected by stopping providing subsidy to the consumers who are using that good or service, or taxing the people if they were not taxed before, or even taxing them higher than the amount that was applied before. This will mean to raise the tax brackets, i.e. upgrading the tax percentages each of the individuals have to pay. Providing benefits to the consumers who do not pay in return is termed as giving unexpected benefit and th e real solution behind the correction of the misallocated resources would be to increase the amount of taxes in a certain region or whole country for some period of time so that the allocated money invested in that good or service is taken back. Then the taxes might be reduced as they were before. 3: There are various goods and services in which people enjoy spillover benefits. Let’s just call government as a production unit, education as a good, and public as consumers who will be benefitted through that good. The government will provide that good, i.e. education free to all the consumers in the public, and no direct tuition fees are collected. In return the government or that production company is not getting back anything in return. This will mean the public enjoying the spillover benefits over the services provided to them. The education is free in most of the countries in the world at school level where no hidden charges are taken. However, there are hidden charges, as the