Which of the following most accurately states the economic significance of exchange?
a. Physical goods have value because they exist; exchange can neither increase nor decrease their value.
b. Exchange creates value by permitting trading partners to expand total output as the result of specialization in areas where they have a comparative advantage.
c. Exchange creates value by moving goods from people who value the goods less to people who value the goods more.
d. Both b and c are true.
D
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In order to increase society's well-being, a process that produces a positive externality might be
a. taxed to discourage production b. subsidized to encourage production c. taxed to encourage production d. subsidized to discourage production e. provided without government intervention
Which of the following is a problem with discretionary fiscal policy as an economic stabilization tool?
a. Discretionary changes in fiscal policy can be easily anticipated by private decision makers. b. It is difficult to properly time discretionary changes in fiscal policy. c. Discretionary fiscal policy is only effective during a recession. d. Discretionary fiscal policy is only effective during an economic boom.
Which of the following could be used to calculate the profit for a firm?
a. Profit = MR - MC b. Profit = MR - TC c. Profit = (P - MC) × Q d. Profit = (P - ATC) × Q
What is the source of the supply of loanable funds in the open-economy macroeconomic model?