In the open-economy ISLM model, the goods market equilibrium condition is
A) output = consumption + investment + government spending.
B) output = consumption + investment + government spending - tax.
C) output = consumption + investment + government spending + net export.
D) output = potential output.
C
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The problem of overfishing in waters that are commonly owned can be solved by
A) the use of the Coase Theorem. B) establishing property rights for fishing in the waters. C) subsidizing fishing. D) allowing the market to ration fish.
Moral hazard implies that
a. Insured individuals exercise less care because they have less incentive to do so b. Insured individuals exercise more care because they have less incentive to do so c. Insured individuals exercise more care because they have more incentive to do so d. Insured individuals exercise less care because they have more incentive to do so
An economic analysis of "planned obsolescence" shows that
a. monopolies have an incentive to produce shorter-lived products, even when longer-lived products can be produced at the same cost. b. firms prefer to produce shorter-lived products, because these result in greater sales and hence larger profits. c. competitive firms are forced to produce the product with greatest longevity, but monopolies can successfully use planned obsolescence. d. firms will make a longer-lived product if the additional cost is less than the present value of the benefits received by consumers.
U.S. exports involve an:
A. inflow of foreign currency from foreigners to the U.S. economy. B. outflow of dollars from the United States to foreigners. C. outflow of foreign currency from the United States to foreigners. D. inflow of dollars from foreigners to the U.S. economy.