Which of the following statements is TRUE of external costs?
A) External costs should not be corrected since people will bear the costs whether they are corrected or not.
B) There are no good ways to correct for the external costs.
C) When external costs exist, the price of the good will be deceptively low leading to an overallocation of resources.
D) External costs should only be corrected for if the correction will not increase the market price.
C
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A scatter diagram of money growth rates and inflation rates from 1982 to 2010 indicates
A. a clear direct relationship between money growth and inflation. B. a clear indirect relationship between money growth and inflation. C. no clear relationship between money growth rates and inflation. D. that inflation is always and everywhere a monetary phenomenon.
Value and price can be compared by noting that
A) they are the same thing. B) value is always greater than price. C) value is what we must pay, while price is what we are willing to pay. D) price is what we must pay, and value is what we are willing to pay. E) value is what the seller receives when we buy a good, and price is what we must pay when we buy a good.
In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is
a. 14 percent. b. 12.5 percent. c. 8 percent. d. None of the above is correct.
Why is it easier for a partnership to borrow money and to hold good employees than it is for a sole proprietorship to do so?
a. The more limited access to a partner's personal funds make the business more careful. b. The large number of partners makes it more likely that the business will be a success. c. The larger number of partners means that people are easier to get along with. d. A partnership has more personal stability and access to more money.