In a situation in which property rights are not well-defined and social costs exceed private costs, government can use all of the following to induce producers to bring private costs into alignment with social costs EXCEPT
A. regulation of production.
B. taxing production.
C. coercive limits on production.
D. subsidization of production.
Answer: D
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Which of the following is NOT a basis for the Taylor-rule guideline for how the Federal Reserve should set its target value for the federal funds rate?
A) the current deviation of the actual inflation rate from the Fed's inflation objective B) the gap between actual real GDP and a measure of potential real GDP C) an estimated long-run real interest rate D) the present deviation of the actual unemployment rate from the Fed's unemployment objective
An increase in productivity as a result of a new technology would cause the production possibilities frontier to:
A. shift in. B. shift out. C. not move until society chooses to move it. D. become more meaningful in policy decisions.
If the marginal rate of substitution of butter and margarine is constant, the indifference curve is likely to be _____
a. linear b. concave from below c. L-shaped d. U-shaped
Redistribution through the public sector tends to lower economic prosperity because
a. it weakens the link between productive activity and the reward derived from it. b. it encourages resources to flow into wasteful rent-seeking activities. c. the higher tax rates required to finance redistribution result in resources being devoted toward tax avoidance activities. d. all of the above are true.