A private subsidy has what effect on the amount of a good or service produced? Is a private subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?
What will be an ideal response?
A private subsidy increases the production of the good or service that is subsidized. A good or service with an external benefit is underproduced by a competitive, unregulated market. Because it increases the production, a private subsidy is the appropriate policy to overcome the inefficiency that is the result of an external benefit.
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To decrease bank reserves, the Fed can
A) engage in an open market sale. B) reduce reserve requirements. C) lower the discount rate. D) set a lower interest rate for term deposits.
Those who engage in the practice of discrimination today are generally quite blatant
Indicate whether the statement is true or false
International specialization and trade according to the principle of comparative advantage is mutually beneficial for all economies involved
a. True b. False Indicate whether the statement is true or false
Unemployment insurance
a. reduces search effort which raises unemployment. b. reduces search effort which lowers unemployment. c. increases search effort which raises unemployment. d. increases search effort which decreases unemployment.