When the government provides a public good such as a highway,
a. society benefits without necessarily involving a reallocation of resources
b. only highway users benefit and that occurs without necessarily involving a reallocation of resources
c. it uses resources, but the benefits are so great there is no resource reallocation effect
d. it necessarily reallocates resources away from the production of other goods
e. it has the same resource allocation effect on the economy as a government transfer payment
D
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Why do prices have to be based on supply and demand, rather than cost?
A) Costs, unlike supply and demand, are based on subjective factors. B) People cannot be compelled to base prices on costs C) People should be free to set whatever prices they prefer. D) Supply and demand determine costs. E) Because basing prices on costs is less efficient than basing prices on supply and demand.
If demand for a good is price elastic, it must also be income elastic
a. True b. False Indicate whether the statement is true or false
Surveys of consumers regarding labor standards reveal that they:
a. treat potential losses and potential gains equally. b. weigh potential losses more than potential gains. c. weigh potential losses less than potential gains. d. do not experience losses in gains.
Suppose the Fed purchases $100 million of U.S. securities from security dealers. If the reserve requirement is 20 percent, the currency holdings of the public are unchanged, and banks have zero excess reserves both before and after the transaction, the total impact on the money supply will be a:
A. $100 million decrease in the money supply. B. $100 million increase in the money supply. C. $200 million increase in the money supply. D. $500 million increase in the money supply.