The government subsidizes education because:
A. education is thought to have positive externalities.
B. private firms will not provide education.
C. it is a pure public good.
D. the government can provide a better education than can private firms.
Answer: A
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Refer to Figure 15-5. In the figure above, the movement from point A to point B in the money market would be caused by
A) a decrease in real GDP. B) an open market sale of Treasury securities by the Federal Reserve. C) an increase in the required reserve ratio by the Federal Reserve. D) an increase in the price level.
The increase in government spending on unemployment insurance payments to workers who lose their jobs during a recession and the decrease in government spending on unemployment insurance payments to workers during an expansion is an example of
A) discretionary monetary policy. B) automatic stabilizers. C) automatic monetary policy. D) discretionary fiscal policy.
One implication of the median voter model is that candidates running for political office take polls because
A) everyone does it. B) they want to know if they should maintain their current positions or modify them. C) it is good public relations, since if the public learns that the candidate is taking polls, the public will feel that the candidate cares what it thinks. D) taking polls is tax deductible. E) none of the above
When people make decisions in which they only mimic what they think other people are doing, they are engaging in:
A. herding. B. mutual interdependence. C. purposeful behavior. D. enlightened self-interest.