In a free-market economy, a product that entails a positive externality (additional social benefit) will be
A. overproduced.
B. produced at the optimal level.
C. underproduced.
D. provided solely by the government.
Answer: C
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Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the production possibilities frontier
If the production in the economy is centrally planned (and not market oriented) so that the MRS for the current production level is 3 but the MRT is 2, then there will be an excess ________ for milk and an excess ________ for honey. A) demand, supply B) demand, demand C) supply, demand D) supply, supply E) The market is in equilibrium, and there are no imbalances in supply or demand.
What would happen if the German economy became viewed as a less desirable place for foreign investors to put their money because of fears about the growth of the German public debt?
a. Equilibrium would not change. b. A lower quantity of financial investment would result. c. A lower interest rate would result. d. Interest rates would not change.
The private sector cost of tax revenues is equal to the
a. tax revenue collected by government from individuals in the economy. b. income that could have been earned by government employees if they had worked in the private sector. c. difference between government expenditures and tax revenues. d. tax revenue plus the cost of tax compliance and the excess burden of taxation.
In the balance of payments accounts, there will be a surplus in the financial account of a country if:?
What will be an ideal response?