The formula to compute the spending multiplier is:
A. 1 / (MPC + MPS).
B. 1 / (1 ? MPC).
C. 1 / (1 ? MPS).
D. 1 / (C + I).
Answer: B
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Jones and Smith live in the same apartment building. Jones loves to play his opera recordings so loudly that Smith can hear them. Smith hates opera. Jones receives $100 of benefits from his music and Smith suffers $60 of damages. a
From an efficiency perspective, should Jones be allowed to play his opera CDs? b. Suppose the apartment building does not have any rules about noise. Jones and Smith can bargain at zero cost. Will they reach an agreement where Jones gives up his beloved operas? c. Now suppose the apartment building passes a rule that says residents are not allowed to play music their neighbors can hear if any of the neighbors object. As before, Jones and Smith can bargain at zero cost. Will Jones be allowed to play his music?
Which of the following is an example of an activity that creates a positive externality?
a. an iron smelting factory emits sulfur dioxide into the air b. the owner of a steamboat company dredges a river in order to improve navigation c. a group of investors starts a business specializing in transporting goods via clipper ship d. flatboat operators purchase steamboat tickets in order to return to their homes upstream
Which of the following is an example of a negative externality?
A. A Japanese company begins to produce cars and earns large profits. B. An employee of a chemical company spills acid on his arm, causing severe damage. C. John plants fruit trees in his front yard, which attracts bees, which sting neighbor Mary. D. Sally buys coffee at McDonald's, spills some on her, and burns her arm.
M1 money includes all but which one of the following?
A. checkable deposits B. savings accounts C. paper money D. coins