For certain public projects such as building a dam on a river or a bridge to an island, what procedure is a government likely to use to determine what quantity of a public good should be supplied?
A) It hires economists to estimate the market demand for the product.
B) It evaluates the costs and benefits of producing the good.
C) It takes a vote in Congress.
D) It conducts public surveys to determine if consumers want the product.
B
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Suppose the exchange rates between the United States and Canada are in long-run equilibrium as defined by the idea of purchasing power parity. If the law of one price holds perfectly, then differences between U.S
and Canadian rates of inflation would A) have no effect on nominal exchange rates. B) be completely offset by changes in the real exchange rate. C) be completely offset by changes in the nominal exchange rate. D) violate the conditions for the law of one price. E) lead to a change in the real purchasing power of each country's currency when it is converted to the other country's currency.
The consumer price index is
A) an average of the prices of the goods and services purchased by the typical family. B) the cost of a market basket of goods and services typically consumed in a base year. C) the cost of a market basket of goods and services typically consumed in the current year. D) an average of the prices of new final goods and services produced in the economy over a period of time.
If this firm were a perfect competitor selling its entire output at a price of $10, the marginal revenue product of the fourth unit of output would be
A. $0.
B. $10.
C. $15.
D. $20.
At the natural rate of unemployment, the long-run Phillips curve has a(n)
A. vertical slope. B. horizontal slope. C. upward slope. D. downward slope.