Which of the following offers theories to explain why the government, like the private sector, may also "fail"?
a. Social economics.
b. Public choice theory.
c. Rational expectations theory.
d. Keynesian economics.
b
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For a given nominal exchange rate and foreign price level, an increase in the domestic price level ________ the real exchange rate.
A. offsets any change in B. increases C. may either increase or decrease D. decreases
When supply increases and at the same time demand decreases, we
A) can predict that both equilibrium price and quantity will increase. B) can predict that both equilibrium price and quantity will decrease. C) cannot predict equilibrium quantity, but know that equilibrium price will decrease. D) cannot predict the change in either the equilibrium quantity or equilibrium price.
A citizen in a developing country with a currency policy of convertibility on the current account could engage in all of the following transactions except:
A. sell foreign currency resulting from the exports of manufactured t-shirts. B. sell foreign currency resulting from the sale of a U.S. treasury bond. C. purchase foreign currency in order to import a BMW. D. purchase foreign currency in order to purchase a U.S. treasury bond.
An oil producer discovers an oil supply in Texas that can be pumped for a profit of $50 per barrel now, $60 per barrel in three years, $80 per barrel in five years, or $90 a barrel in seven years. The current market rate of interest is 3 percent. When should the oil producer extract the oil to obtain the most profit per barrel in present value terms?
A. Today B. Three years C. Five years D. Seven years