Assume that Abby, Ben, and Clara are the only citizens in a community. A proposed public good has a total cost of $1000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $400 each to Abby, Ben, and Clara. In a majority vote, this proposal will most likely be:
A. Accepted; the public good is produced even though it is economically inefficient
B. Defeated; the public good is not produced even though it would have been efficient to do so
C. Accepted; the public good is produced which is economically efficient
D. Defeated; the public good is not produced, which is the proper outcome
C. Accepted; the public good is produced which is economically efficient
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The Federal Reserve responded to the 2008 financial crisis in several ways. Which of the following is one of the ways the Fed responded?
A) The Fed helped Citibank to acquire General Motors and Chrysler. B) The Fed lowered the required reserve ratio on demand deposit accounts in order to increase the amount of bank reserves. C) The Fed banned investment banks from obtaining discount loans. D) The Fed lent investment banks Treasury securities in exchange for mortgage-backed securities.
Learning curves mean
a. you learn from experience b. current production decreases future unit costs c. production today leads to lower costs in the future d. All of the above
Other things the same, an increase in the price level makes the dollars people hold worth
a. more, so they are willing to spend more. b. more, so they are willing to spend less. c. less, so they are willing to spend more. d. less, so they are willing to spend less.
Suppose that the money prices of raw materials increase so that short-run aggregate supply decreases. If the Federal Reserve does not respond, the higher money price of raw materials will
What will be an ideal response?