If a product has an external benefit, how does its marginal private benefit compare to its marginal social benefit?
A) Marginal private benefit is less than marginal social benefit.
B) Marginal private benefit is greater than marginal social benefit.
C) At low quantities, marginal private benefit is less than marginal social benefit but at high quantities, marginal private benefit is greater than marginal social benefit.
D) At low quantities, marginal private benefit is greater than marginal social benefit but at high quantities, marginal private benefit is less than marginal social benefit.
E) Marginal private benefit cannot be compared to marginal social benefit.
A
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Indicate whether the statement is true or false
Which of the following equations shows inelastic demand?
a. ED < 1 b. ED >1 c. ED = 1 d. ED x 1
An example of stimulus spending by the government might be:
A. the monthly payments a government agency makes to its employees. B. increase in government purchases of new cars. C. the FED engaging in open market sales of securities. D. a cut in the government budget aimed at spurring private consumption.
One argument for an independent central bank is:
A. the central bank usually hires more competent individuals than the Treasury department or other finance ministries. B. without independence competent people would not take a position in a central bank. C. central bankers have a short-run focus that usually corrects problems faster. D. successful monetary policy requires a long time horizon usually well beyond the next election of most public officials.