All externalities:
A. are harmful to society and create costs external to the decision maker.
B. are beneficial to society and create benefits external to the decision maker.
C. create either a cost or benefit to a person other than the person who caused it.
D. are addressed by the government through taxation.
C. create either a cost or benefit to a person other than the person who caused it.
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Suppose that, in a sequential game, the first player chooses the strategy with the highest payoff, taking into account an optimal response from the second player. The outcome that results is
a. a Nash equilibrium. b. Pareto optimal. c. a Prisoners' Dilemma. d. a Stackelberg equilibrium.
Your roommate argues that he can think of no better situation than living in a deflationary economy, as prices of goods and services would continuously fall. You disagree and argue that during a deflation, people can be made worse off because
A) the value of the real interest rate will drop below the nominal interest rate. B) borrowers will have to pay increasing amounts in real terms over time. C) the purchasing power of people's incomes would increase. D) the purchasing power of the currency would decrease.
Suppose the federal budget deficit for the year was $100 billion and the economy was in a recession
If the economy had been at potential GDP, it is estimated that tax revenues would have been $60 billion higher and government spending on transfer payments $50 billion lower. Using these estimates, the cyclically adjusted budget A) deficit was $210 billion. B) deficit was $110 billion. C) surplus was $110 billion. D) surplus was $10 billion.
Total reserves minus bank deposits with the Fed equals
A) vault cash. B) excess reserves. C) required reserves. D) currency in circulation.