Society is likely to over-allocate resources to produce goods that
A. are public goods.
B. generate negative externalities.
C. generate positive externalities.
D. are merit goods.
Answer: B
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If the Fed follows a policy of fixed exchange rates, an undervalued dollar will force the Fed to
a. conduct open market purchases. b. raise the discount rate. c. raise the required reserve ratio. d. cut taxes or raise government spending.
The CPI differs from the GDP deflator in that
a. the CPI is a price index, while the GDP deflator is an inflation index. b. substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator. c. increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator. d. increases in the prices of domestically produced goods that are sold to the U.S. government show up in the CPI but not in the GDP deflator.
What is the opportunity cost of going from point C to point D?
Which one of the following statements about water pricing in the United States is true?
a. As most water utilities are monopolies, they tend to make excessive profits b. Water prices are normally set according to the average cost of providing water c. Water prices are normally set according to the marginal water cost of providing water d. Water prices are normally set according to the interaction of supply and demand e. Water prices fluctuate significantly based on changes in seasonal demands