The Coase theorem will hold only if:
A. there are no transactions costs.
B. people can make enforceable agreements.
C. Both of these must hold true.
D. Neither of these must hold true.
Answer: C
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Refer to the above figure. Mario is self-sufficient and so is Mia. Each produces 6 dishes of pasta and 4 pizzas. Mario and Mia decide to specialize and trade
After they have specialized and traded, compared to the initial situation, Mia's opportunity cost of pasta has ________ and Mario's opportunity cost of a pizza has ________. A) decreased, decreased B) decreased, increased C) increased, increased D) increased, decreased
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model? a. The real risk-free interest rate rises and real GDP falls
b. The real risk-free interest rate falls and real GDP rises. c. The real risk-free interest rate rises and real GDP remains the same. d. The real risk-free interest rate and real GDP remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Pure inflation occurs when
A) nominal wages rise faster than all prices. B) all prices rise faster than nominal wages. C) all prices and nominal wages rise by the same percentage. D) the GDP deflator and Consumer Price Index rise by the same percentage. E) none of the above
A level of GDP cannot be at equilibrium when aggregate demand exceeds output because firms will notice that
A. inventory stocks are building up. B. inventory stocks are being depleted. C. their profits are negative. D. many of their workers have little to do.