Suppose an individual discovers the mouth of a previously unknown cave (expected to contain a single large diamond) on his property that extends under land owned by others. To arrive at an economically efficient outcome with low transaction cost, the law will:
a. award the diamond to the person who locates the diamond first.
b. award the diamond and cave to the person whose land it opens into.
c. award the diamond to the owner of the land above it.
d. award the diamond to each of the owners under whose land the cave passes.
B
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The U.S. economy is relatively closed in terms of economic activity related to exports and imports.
Answer the following statement true (T) or false (F)
Which of the following statements is correct?
A. Structural unemployment is unemployment resulting from changes in the structure of consumer demand or technology. B. Search unemployment is the broadest unemployment category because it covers all other types of unemployment. C. Frictional unemployment is the result of friction between labor and management over how best to perform work. D. Cyclical unemployment is also called wait unemployment because this unemployment depends on the timing of the business cycle.
When all variables start out at their long-run equilibrium levels, the most important determinant of long-run swings in nominal exchange rates is
A) a shift in relative money supply levels. B) a shift in relative money supply growth rates. C) a change in relative output demand. D) a change in relative output supply. E) a change in relative inflation rates.
Which of the following observations is true?
a. Tax changes have no impact on the consumption schedule. b. Tax reduction shifts the consumption schedule upward. c. Changes in taxes have a multiplier effect on equilibrium GDP on the supply side. d. Tax increases increase equilibrium GDP.