Which of the following is an example of a negative externality?
A. planting flowers in your front yard
B. talking loudly when others are trying to study economics
C. people donating money to charity
D. a smoker getting lung cancer
Answer: B
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The Federal Reserve responded to the 2008 financial crisis in several ways. Which of the following is one of the ways the Fed responded?
A) The Fed helped Citibank to acquire General Motors and Chrysler. B) The Fed lent investment banks Treasury securities in exchange for mortgage-backed securities. C) The Fed lowered the required reserve ratio on demand deposit accounts in order to increase the amount of bank reserves. D) The Fed banned investment banks from obtaining discount loans.
Between 1965 and 1972, eight major pieces of consumer-protection legislation were enacted. This burst of legislative activity was largely driven by
a. increased public fears following the thalidomide tragedy. b. public outcry following a series of steamboat explosions. c. a general lack of faith in the market. d. widespread support for the "Reagan Revolution.".
If two investments are perfectly positively correlated:
A. there is no benefit from diversification. B. bets are perfectly hedged and risks are canceled out. C. diversification reduces risk without changing the expected payoff. D. diversification reduces both risk and the expected payoff.
The classical economists felt that wages and prices were flexible in
A) neither the upward direction nor the downward direction. B) the upward direction but not in the downward direction. C) the downward direction but not in the upward direction. D) both the upward and downward directions.