As some government spending is for true public goods in sending countries, the loss of future tax contributions is likely to be _____ the reduction in future government spending as people migrate from the country.
A)larger than
B)smaller than
C)equal to
D)independent of

Question

Quizplus · Accepted Answer

Public goods are non-excludable and non-rivalrous, meaning they are available to all citizens without additional cost for extra users. When people migrate, the cost of providing these goods does not decrease proportionally because they are still available to everyone remaining. However, the tax contributions from those who leave directly decrease, making the loss in future tax contributions larger than the reduction in future government spending.

As Some Government Spending Is for True Public Goods in Sending