Equilibrium in the market for funds occurs when the
a. lenders and borrowers are mutually satisfied at some interest rate.
b. marginal revenue product of investment using the funds equals the interest rate.
c. demand curve for funds and the supply curve for funds intersect.
d. All of the above are correct.
d
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Refer to Figure 5-4. What does S1 represent?
A) the market supply curve that reflects private cost B) the market supply curve that reflects only private benefit C) the market supply curve that reflects only external cost D) the market supply curve that reflects social cost
Return to the case of Jan, the hyperbolic discounter from the previous question. Suppose she can sign a contract that requires her to give up money equivalent to a loss of X utils if she does not undertake the action. Assume she does not behave consistent with her plans without this contract. How high would the contractual value of X have to be to prevent her inconsistency?
a. C – B/2. b. B. c. C. d. B + C.
Critics of macroeconomic stabilization policies argue that
a. economists are unable to influence policy. b. stabilization policies often do more harm than good. c. stabilization theory has no practical effect. d. policy makers need practical advice, not theory.
In the town of Gotham the adult population is 560 thousand, the number unemployed is 25 thousand, and 185 thousand are not in the labor force. Calculate the unemployment rate