In the United States saving is allocated to its most productive use by:
A. the federal, state, and local governments.
B. the Federal Reserve.
C. a decentralized, market-oriented financial system.
D. regulations and laws designed to improve productivity.
Answer: C
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The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost to the economy of Kaffenia of producing the 300th dozen doughnuts each day?
A) $10.00 per dozen B) $8.00 per dozen C) $6.00 per dozen D) $4.00 per dozen
All of the following are true regarding moral hazard except which one?
A) It arises when parties to a transaction have conflicting objectives and the supervising parties cannot monitor the other parties. B) It typically occurs after participants have already entered into a contract or agreement. C) It is a situation in which individuals make hidden actions that benefit them at the expense of the other parties. D) Situations of moral hazard tend to be rare occurrences.
Opponents of inflation targets say that: a. such targets encourage workers to expect a low and stable inflation rate and hold down demands for wage increases. b. the Fed pays less attention to jobs and economic growth when it sets such targets
c. such targets encourage firms to plan on a low and stable inflation rate and hold down price increases. d. such targets encourage investors to plan on a low and stable inflation rate and hold down demands for interest rate increases. e. the Fed pays more attention to jobs and economic growth when it sets such targets.
Find the PVB and PVC in real terms over a 3-year period, assuming a discount rate of 7 percent and an inflation rate of 3 percent. Use the midpoint benefit value, or $4.2 billion, and the midpoint cost value, or $645 million, for each year. Round to two decimal values for each year.
REGULATORY IMPACT ANALYSIS (RIA) FOR LEAD IN DRINKING WATER In June 1991, the EPA announced a maximum contaminant level goal (MCLG) of zero for lead and a more stringent maximum contaminant level (MCL) of 0.015 mg/l. This new primary standard lowered the allowable lead level in drinking water from its former limit of 50 parts per billion (ppb) to 15 ppb. Because these regulations were expected to have a substantial financial impact on the regulated community — in excess of $100 million per year, they were subject to Executive Order 12291 and had to be accompanied by a Regulatory Impact Analysis (RIA). A summary of the estimated benefits and costs (stated as annualized values) from this RIA, is given below. BENEFITS Health (based on avoided medical costs) From corrosion control and source water treatment: $2.8 – $4.3 billion per year From replacement of lead service lines $70 – $240 million per year Material Accruing to households and water systems $500 million per year Incremental Benefits $3.4 – $5.0 billion per year COSTS Treatment, implementation, education costs Treatment costs: $390 – $680 million Monitoring costs: $ 40 million Education costs: $ 30 million State implementation costs: $ 40 million Incremental Costs $500 – $790 million per year NET BENEFITS Net Benefits: $2.9 – $4.2 billion per year