Consider the case of two farmers, Tony and Hakim, depicted in the following figure. Both use DDT (a chemical pesticide) for their crops. The use of DDT causes an externality for swimmers down river from the farms.
(a) Show the amount of pesticides used if each uses the privately optimal level of pesticides.
(b) Show the amount of pesticides used if they are socially concerned.
(c) Why is a reduction back to X H = H T not socially desired?
(a)
(b)
(c) Not socially optimal.
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"The velocity of circulation is the average speed with which money is loaned to businesses and households." Is the previous statement correct or incorrect?
What will be an ideal response?
Which of the following is true about the Federal Reserve and its ability to prevent recessions? The Federal Reserve
A) can fine tune the economy and realistically hope to keep the economy from experiencing recessions. B) cannot realistically fine tune the economy and has little to no effect on the magnitude and length of recessions. C) does not try to eliminate recessions, but instead focuses on preventing inflation. D) cannot realistically fine tune the economy, but seeks to keep recessions shorter and milder than they would otherwise be.
Suppose a country has a national debt of $5,000 billion, a GDP of $20,000 billion, and a budget surplus of $130 billion. How much will its new national debt be?
A) $5,130 billion B) $4, 870 billion C) $15,130 billion D) $19, 870 billion
A supply shock is an event that directly alters firms’ costs and prices, shifting the economy’s aggregate supply and thus the Phillips curve.
Answer the following statement true (T) or false (F)