The free-rider problem can occur when
A. government deregulates the public transit system.
B. welfare programs are not regulated well enough.
C. public goods are provided to an individual who receives the benefit but does not pay for it.
D. the government taxes a good or service.
Answer: C
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Developing countries should
What will be an ideal response?
What type of policy does the government adopt in dealing with government-inhibited goods?
A) It subsidizes their consumption. B) It subsidizes their production. C) It provides them as public goods. D) It taxes, regulates, or prohibits their use.
Commercial banks create money through
A. reducing risk in the economy. B. printing treasury notes. C. making loans. D. facilitating borrowing from the Federal Reserve to the public.