A key assumption of public choice economics is that government officials are:
A. not rational.
B. rational and respond to incentives.
C. trying to do only what is best for society.
D. not influenced by incentives.
Answer: B
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To reach an economically efficient output level, the size of an excise tax imposed on a firm generating a negative externality should be:
a. the firm's marginal cost. b. the social marginal cost. c. the difference between the social marginal cost and the firm's marginal cost. d. the sum of the social marginal cost and the firm's marginal cost.
A decrease in the money supply in the short run will cause an increase in planned investment spending
a. True b. False Indicate whether the statement is true or false
If the slope of the rays from the origin to the total variable cost curve declines along the curve, it implies:
a. the average variable cost is falling. b. the marginal cost is falling. c. the average variable cost is rising. d. the marginal cost is rising.
Fixed exchange rate regimes include each of the following, except:
A. the Bretton Woods exchange rate system. B. exchange rate pegs. C. currency boards. D. dollarization.