The optimal size of a project is _____
a. the one that produces the highest net benefits
b. the one that has the highest ratio of benefits to costs
c. the one where the distance between marginal benefits and marginal costs is greatest
d. a and c
d
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"Financial distress" is more easily handled in a __________-oriented financial system, in which ownership of the firm tends to be spread among __________ shareholders than in the other type of system
A) markets; more B) markets; fewer C) banking; more D) banking; fewer
In Macroland, potential output equals $100 trillion and the natural rate of unemployment is 4 percent. If the actual unemployment rate is 5 percent, then real GDP must be:
A. $96 trillion. B. $104 trillion. C. $98 trillion. D. $102 trillion.
How does a higher level of saving lead to higher GDP in the future?
(A) Because increased savings will divert money that would be spent on imported goods in the current year. (B) Because more capital is available for investment, leading to higher output through capital deepening. (C) Because a higher national savings rate encourages immigration and expands the labor force. (D) Because the government taxes savings accounts to pay for education.
The Children's Health Insurance Program is designed to
A. replace Medicaid for children. B. augment Medicaid by insuring the children of working (but low income) families who have no insurance. C. insure all children, regardless of circumstance. D. replace Medicaid for families with children.