Assume that an additional $50,000 in benefits will be received each year if a town hires an additional police officer whose only job would be to catch drivers who drive over the speed limit on its only street. What must the additional cost of this
additional police officer be to make this hiring economically rational?
What will be an ideal response?
The additional cost of the additional police officer must be no more than $50,000 for the year to make the hiring economically rational.
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Which of the following is NOT an expected consequence of balancing the federal government's budget?
A) increased private investment B) increased borrowing from foreigners C) reduced interest payment to foreigners D) B and C.
In addition to open market operations and the required reserve ratio, another tool of monetary policy available to the Fed is
A) fiscal policy. B) tax rates and the progressivity of the income-tax system. C) government spending and various transfer-payment programs. D) the difference between the discount rate and the federal funds rate.
Economists observed the following growth rates in the fourth quarter of 1995: real GDP = 2.8 percent; M1 = 7.8 percent; GDP Deflator = 2.2 percent. Given this data, the growth of nominal GDP was approximately
a. 12.8 percent. b. 10.0 percent. c. 5.6 percent. d. 5.0 percent. e. 0.6 percent.
If the MPC is 2/3, the initial impact of an increase of $12 billion in lump-sum taxes will be to cause:
A. a rightward shift in the investment demand schedule. B. an $8 billion downshift in the consumption schedule. C. a $4 billion upshift in the consumption schedule. D. a $12 billion downshift in the consumption schedule.