In a labor-market separating equilibrium with high-skill and low-skill workers and where a costly educational degree is used solely as a signal device, government can increase total social welfare by
A) subsidizing school for low-skill workers.
B) subsidizing school for all workers.
C) eliminating schooling, i.e., banning wasteful signaling.
D) subsidizing school for high-skill workers.
C
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The formula for the government spending multiplier is
A) (1 + b) / (1 - b). B) -b / (1 - b). C) 1 / (1 - b). D) b / (1 - b).
Other things the same, a decrease in the U.S. real interest rate induces
a. Americans to buy more foreign assets, which increases U.S. net capital outflow. b. Americans to buy more foreign assets, which reduces U.S. net capital outflow. c. foreigners to buy more U.S. assets, which reduces U.S. net capital outflow. d. foreigners to buy more U.S. assets, which increases U.S. net capital outflow.
Keynes's liquidity preference theory of the interest rate suggests that the interest rate is determined by
A. the supply and demand for labor. B. aggregate supply and aggregate demand. C. the supply and demand for loanable funds. D. the supply and demand for money.
When the government eliminates artificial barriers to entry:
A. firm profits will rise. B. prices to consumers will likely decrease. C. competition in the market will decrease. D. All of these will occur.