Geraldo wants to purchase Marlena's 1914 prairie-style house so he can tear it down to build a 10,000 square foot home with space to operate his hypnotherapy practice
Marlena's great-grandfather built the 1914 house and she has no intention of selling it, especially to someone who wants to tear it down. The mayor, who is a friend and client of Geraldo, talks to Marlena and tells her that since Geraldo's proposed house would generate 20 times as much property tax for the city as Marlena's current house does, Marlena will need to either tear down the house herself and build a house comparable to the one Geraldo wants to build, or eminent domain will be used to force the sale of her house. In this case, the threat of eminent domain A) is in the best interest of society in general.
B) would move a resource from someone who values it less to someone who values it more.
C) gives people incentives to make second-best choices.
D) would increase the size of the economic pie since property-tax revenues would increase.
C
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Although a corporation that is owned by its member banks, the Federal Reserve System
A. reports directly to the president in an annual report. B. is quite independent of them, and they receive almost none of the Fed’s profits. C. is administered by Congress and all its profits are distributed to the member banks. D. turns all its profits over to the state governments of each district bank.
Which of the following metaphors best expresses the scientific nature of economic theory?
A) like a wool sweater, economic theory warms the heart of the economist. B) like a pair of eyeglasses, economic theory allows one to more clearly see and discriminate among the countless facts he or she faces. C) like a gun, economic theory shoots holes through every other rival theory. D) like a bank, economic theory is concerned with only one thing: the accumulation of money.
Cartels rarely succeed for long because they find it difficult to
A) avoid losing the advantages from economics of scale. B) keep marginal costs high and marginal revenue low. C) keep members from offering discounts and new firms from entering. D) keep members from reducing output below the optimal level. E) prevent average cost from falling below marginal cost.
Which of the following statements is an example of the Fed's conditional commitment policy?
A) "In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period." B) "The Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time." C) "Policy accommodation can be removed at a pace that is likely to be measured." D) "The exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, and inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal."