Ball found that the disinflation of the early 1980s in the United States had a sacrifice ratio of about
A. 0.
B. 1.
C. 2.
D. 3.
Answer: C
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If firms maintain preset prices in the short run, then the primary cause of output gaps is changes in:
A. potential output. B. economy-wide spending. C. prices. D. capital and technology.
The schedule of tolls capable of maximizing the net revenue of a bridge owner
A) has no relationship to the cost of constructing the bridge. B) is the highest anyone will pay rather than forgo the opportunity to cross the bridge. C) varies proportionately to the cost of constructing the bridge. D) will be higher than the corresponding tolls for a tunnel, because tunnel construction costs must be sunk rather than elevated.
A museum is NOT a public good if
A) there can be no congestion. B) the museum receives donations from members of the public. C) an entry fee is charged and people are denied entry if they do not pay. D) the general public typically does not go to the museum.
Long Beach Island, off the coast of New Jersey, is considering enhancing its system of satellite towers to help communication during emergencies such as hurricanes
A study showed that in Superstorm Sandy the existing number of satellite towers resulted in the marginal social cost of a satellite tower being less than the marginal social benefit. To achieve efficiency, this study indicates that the A) system should be left as is because the quantity of satellite towers is efficient. B) system should be reduced in size because the quantity of satellite towers is more than the efficient quantity. C) system should be expanded because the quantity of satellite towers is less than the efficient quantity. D) None of the above because the study erred in comparing the marginal social cost to the marginal social benefit since it should have compared the marginal private cost to the marginal private benefit.