Chapter 20. Chapter 20 (Chapter 21 Macro)

Step 1

Work It Out
Chapter 20 (Chapter 21 Macro)
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You must read each slide, and complete any questions on the slide, in sequence.

Question

Let’s walk through the median voter theorem in a little more detail. Consider a town with three voters, Enrique, Nandini, and Torsten. The big issue in the upcoming election is how high the sales tax rate should be. As you’ll learn in macroeconomics (and in real life), on average, a government that wants to do more spending has to bring in more taxes, so “higher permanent taxes” is the same as “higher government spending.” Enrique wants low taxes and small government, Nandini is in the middle, and Torsten wants the biggest town government of the three. Each one is a stubborn person, and his or her favorite position—what economic theorists call the “ideal point”—never changes in this problem.Their preferences can be summed up like this, with the x denoting each person’s favorite tax rate:

The horizontal line is given for sales tax rate. The sales tax rate is in range from 0 to 20 percent. There are three points labeled as Enrique, Nandini, and Torstein. Point Enrique is in extreme left position. Point Torstein is almost in extreme right position. Point Nandini is between points Enrique and Torstein, closer to point Torstein. There are three vertical dashed lines intersecting the horizontal line. The dashed lines labeled as N and O are between points Enrique and Nandini, closer to point Enrique. Line N is to the left of line O. The dashed line labeled as P is between points Nandini and Torstein. The closest line to point Nandini is line P. Therefore, the labels are in the following sequence, from left to right: Enrique, N, O, Nandini, P, Torstein.

Suppose there are two politicians running for office, N and O (so ignore P for now). Enrique will vote for 2rtXH4xyxFE=, Nandini will vote for Gy14tCcIxQw= and Torsten will vote for Gy14tCcIxQw=. Candidate Gy14tCcIxQw= will win the election.

Correct! Voters will choose the candidate closest to their preferred position so in this case Enrique votes for N since he is closer than O, while Nandini and Torsten cast their votes for O for the same reason. O wins due to earning a majority.
Sorry! Consider who each person will vote for given each candidate’s position relative to each person’s “ideal point.” To review the median voter theorem, please see the section “Two Cheers for Democracy.”

Step 2

Question

The horizontal line is given for sales tax rate. The sales tax rate is in range from 0 to 20 percent. There are three points labeled as Enrique, Nandini, and Torstein. Point Enrique is in extreme left position. Point Torstein is almost in extreme right position. Point Nandini is between points Enrique and Torstein, closer to point Torstein. There are three vertical dashed lines intersecting the horizontal line. The dashed lines labeled as N and O are between points Enrique and Nandini, closer to point Enrique. Line N is to the left of line O. The dashed line labeled as P is between points Nandini and Torstein. The closest line to point Nandini is line P. Therefore, the labels are in the following sequence, from left to right: Enrique, N, O, Nandini, P, Torstein.

O drops out of the campaign after the local paper reports that he hasn’t paid his sales taxes in years. P enters the race, pushing for higher taxes, so it’s N vs. P. Voters prefer the candidate who is closest to them. Enrique will vote for UW3vrr+H0DA=, Nandini will vote for RDkj89EdyJY= and Torsten will vote for RDkj89EdyJY=. Candidate RDkj89EdyJY= will win the election.

4:47
Correct! Voters will choose the candidate closest to their preferred position so in this case Enrique votes for N since he is closer than P, while Nandini and Torsten cast their votes for P for the same reason. P wins due to earning a majority.
Sorry! Consider who each person will vote for given each candidate’s position relative to each person’s “ideal point.” To review the median voter theorem, please see the section “Two Cheers for Democracy.”

Step 3

Question

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

Step 4

Question

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