Kris, Taylor and Max are the only three residents in a neighborhood. A public good that would benefit all of them has a one-time installation cost of $900. The value of the public good to each resident is shown in the table below. Any tax plan must be approved by simple majority.ResidentReservation PriceIncomeKris$100$1,000Taylor$200$5,000Max$700$6,000 If the government proposes to pay for the public good with a head tax of $300 per resident, then
A. Max will vote in favor of the tax, but Kris and Taylor will vote against it.
B. all three will vote in favor of the tax.
C. Max will vote against the tax, but Kris and Taylor will vote in favor of it.
D. all three residents will vote against the tax.
Answer: A
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Refer to Table 12.1. Assuming the inflation rate forecast to be accurate, which nation has the lowest real rate of return?
A) Japan B) Australia C) the United States D) South Africa
One problem with the ripple effect from the Fed's monetary policy is
A) the fact that the monetary policy transmission process is long and drawn out. B) that changing the Federal funds target rate seldom has an effect on the markets for reserves and loanable funds. C) the frequent misalignment of the spread between the Federal funds rate and the Federal funds rate target. D) that the Fed's policy sometimes has a large impact on potential GDP as well as its usual impact on aggregate demand. E) the tight relationship between that the Federal funds rate has to aggregate spending.
Which of the following has the lowest present value?
A) $1,000 received in 3 years if the current interest rate is 4% B) $1,500 received in 5 years if the current interest rate is 6% C) $2,000 received in 6 years if the current interest rate is 11% D) $3,000 received in 10 years if the current interest rate is 13%
The above figure shows supply and demand curves for apartment units in a large city. If the city government passes a law that establishes $350 per month as the legal maximum rent, deadweight loss occurs because
A) consumers place a greater value on the last apartment unit than the cost to supply it. B) the supplier of the last apartment unit receives a rental price that is less than the marginal cost of supplying it. C) the quantity of apartments supplied has decreased. D) All of the above.