What are the public choice theory arguments against government involvement in the economy?
What will be an ideal response?
Public choice theory emphasizes the possibility of government failure (government attempting to do good but instead manages to make matters worse). Government failure may stem from majority rule that does not rely on benefit-cost analysis, special-interest groups capturing most of the benefits, rational voter ignorance, inefficient bureaucratic behavior, and shortsighted political behavior.
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New Source Performance Standards (NSPS)
a. were revoked by the Clean Air Act Amendments of 1990 b. are applicable to new and modified stationary sources c. are performance-based standards defined by the EPA d. are more lenient than emissions limits for existing sources e. none of the above
Financial markets pay close attention to changes in the federal funds rate because these changes:
A. indicate commercial bank lending policies. B. directly affect the interest payments on the national debt. C. directly affect a large volume of loans. D. indicate the Fed's plans for monetary policy.
Which criterion is NOT useful when evaluating a theory?
A) It has predictive power. B) It fits one's pre-conceived bias. C) It offers a model consistent with investor behavior. D) It explains actual data well.
According to the expectations theory, what will be the interest rate on a three-year bond if a one-year bond has an interest rate of 2% and is expected to have an interest rate of 3% next year and 5% in two year?
Report your answer using a percentage with two decimal places.