Carmen listens to opera music every evening when she gets home from work. Carmen loves listening to opera, but her neighbor Paul, who can also hear the music, hates it. If Paul is the only person besides Carmen who can hear the music, then Carmen's music generates:
A. neither a positive nor a negative externality.
B. a positive externality.
C. a negative externality.
D. both a positive and a negative externality.
Answer: C
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Investment in human capital implies:
a. investment on machines, technological development, and equipments. b. expenses on education. c. expenses on paying interest for hiring real capital. d. expenses on the purchase of land. e. profit of the entrepreneurs.
Which of the following is a contractionary fiscal policy that decreases the level of aggregate demand?
a. reduced business taxes b. reduced government spending c. reduced payroll taxes d. reduced personal income taxes
If a person could increase total utility by purchasing more candy and fewer apples, then the
a. total utility from candy must exceed the total utility from apples b. marginal utility of candy must exceed the marginal utility of apples c. marginal utility per dollar spent on candy must exceed the marginal utility per dollar spent on apples d. total utility per dollar spent on candy must exceed the total utility per dollar spent on apples e. marginal utility per dollar spent on candy must be less than the marginal utility per dollar spent on apples
When the Social Security surplus is used to cover the current operating expenses of the federal government, it will
a. make it easier for future taxpayers to provide promised Social Security benefits to baby boomers. b. reduce the outstanding debt of the federal government. c. make it possible for Congress and the president to spend more without raising current taxes or borrowing from the general public. d. increase the credibility of the Social Security benefits promised to future retirees.