According to the equimarginal principle, if the marginal cost of an activity outweighs the marginal benefit, then
a. the activity should not be pursued at all.
b. less of the activity should be undertaken.
c. the net total benefit received from the activity is negative.
d. people should expand their pursuit of the activity.
b. less of the activity should be undertaken.
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According to Hayek, a social planner has no hope of matching the efficiency of a competitive pricing system because
a. no social planner can be completely benevolent in his actions. b. a social planner cannot have access to the specialized knowledge of individuals. c. the social planner will be unable to fully monitor the activities of his agents. d. people are selfish and will not be actively altruistic to the social planner.
To achieve cost-effectiveness among options that satisfy the benefit objective
a. both PVB and PVC must be minimized b. PVB must be minimized and PVC must be maximized c. PVC must be minimized d. none of the above
Suppose the government of the United States has instituted an expansionary fiscal policy to boost aggregate output. The United States has a floating exchange-rate regime and there is a high degree of capital mobility.a. If the exchange-rate value of the dollar remains steady, what are the effects of the expansionary fiscal policy on the U.S. national product and income? What is the effect on the U.S. unemployment rate? Explain.b. Following the fiscal expansion, what is the likely pressure on the exchange-rate value of the dollar? Explain.c. What are the implications of the change in the exchange-rate value of the pound for U.S. national product and unemployment? Does the change in the exchange rate tend to reinforce or counteract the expansionary thrust of U.S. fiscal policy? Explain.
What will be an ideal response?
Which of the following represents a stock's fundamental value?
A) the price the stock would sell at in the midst of a rational bubble B) the price the stock would sell at if the interest rate were zero C) the present value of its expected future dividend payments D) the simple sum of its future dividend payments E) none of the above