Which of the following is a common method used by government to cope with the situation in which production of a good creates an external cost?
A) removing property rights
B) subsidizing production
C) marketable permits
D) lottery
E) vouchers
C
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To calculate the ________ of an alternative, an individual needs to estimate ________ of the alternative
A) marginal benefit; total cost B) marginal cost; total benefit C) opportunity cost; total benefit D) net benefit; both cost and benefit
Which of the following best describes the economy's stock of equipment and structures?
a. capital b. aggregate demand c. long-term inventory d. aggregate stock
When the equilibrium dollar price of a foreign currency decreases due to changes in demand for or supply of the foreign currency, the domestic currency
A) has appreciated. B) has depreciated. C) is overvalued. D) is undervalued. E) is revalued.
Assume individuals consider only the medium run effects of changes in future macro variables when forming expectations of future output and future interest rates. Suppose individuals expect future taxes to decrease. Given this information, individuals will expect
A) an increase in the expected future interest rate and no change in expected future output. B) an increase in the expected future interest rate and an increase in expected future output. C) an increase in the expected future interest rate and a reduction in expected future output. D) an increase in the expected future interest rate and an ambiguous effect on expected future output.