Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's theorem, one necessary condition to alleviate the externality is that
A) Al is fined by the government.
B) Al has the right to leave trash and Bert cannot do anything about it.
C) Bert has the right to a clean park and Al cannot leave trash.
D) Either Al or Bert owns the park.
D
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A Pareto optimum is a point that
A) a malevolent dictator would choose. B) a cooperative coalition of some altruistic consumers would choose. C) a cooperative coalition of some socially responsible firms would choose. D) a social planner would choose.
An increase in the price level or in the real GDP, with velocity stable, shifts the :
a. money demand curve leftward. b. money supply curve leftward. c. money demand curve rightward. d. money supply curve rightward.
Flexible exchange rates ________ of monetary policy to stabilize the economy and fixed exchange rates ________ of monetary policy to stabilize the economy.
A. strengthen the impact; strengthen the impact B. offset the impact; reinforce the impact C. strengthen the ability; prevent the use D. prevent the use; strengthen the ability
The fact that every dollar that the government spends or transfers must ultimately be provided by the taxes and user charges it collects plus government borrowing is known as the
A) government balance sheet constraint. B) government budget constraint. C) tax collection constraint D) user charge constraint.