When property rights are not well established,
a. private goods become public goods.
b. markets fail to allocate resources efficiently.
c. the distribution of private goods is unfair.
d. government resources are used inefficiently.
b
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The present value of $100 to be received in a year is
A) less than $100 and falls as the interest rate rises. B) less than $100 and rises as the interest rate rises. C) more than $100 and falls as the interest rate rises. D) more than $100 and rises as the interest rate rises.
The funds to pay for police protection are usually raised through taxation because
a. police protection would be hard to provide exclusively to those who voluntarily pay for it b. people would not voluntarily pay salaries to officials who might arrest them c. police protection is a basic necessity d. goods financed through taxation can be guaranteed to all who pay for it e. the government believes that those who receive the benefits from the service should pay for it
The Fed and the government are working against each other if, as the government cuts taxes to promote economic growth, the Fed
a. sells government securities. b. buys government securities. c. lowers the discount rate. d. lowers the prime rate.
The invisible hand principle indicates that competitive markets can help promote the efficient use of resources
a. only if buyers and sellers really care, personally, about economic efficiency. b. if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely. c. even when each market participant cares only about their own self-interest rather than about the overall efficiency of resource use. d. even if business firms fail to produce goods efficiently.