Public choice analysis indicates that elected political officials will find debt financing
a. unattractive because voters will recognize that excessive debt will lead to the future collapse of the economy.
b. attractive because countries with a higher debt to GDP ratio generally grow more rapidly.
c. unattractive because both politicians and voters will recognize that a larger outstanding debt will mean higher future taxes.
d. attractive because current spending can provide voters with highly visible goods, services, and transfer payments, while borrowing will push the most visible cost of this spending into the future.
D
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An advantage monetary policy has over fiscal policy is that monetary policy
A) can be quickly changed and implemented. B) is coordinated with fiscal policy. C) is approved by the president of the United States. D) affects consumption expenditure and investment without impacting international trade. E) has no multiplier effects.
Following adjustments to a new equilibrium in a market, the equilibrium quantity remains unchanged, but the market clearing price is now lower. Which of the following could definitely have caused this outcome?
A) Demand and supply both increased. B) Demand and supply both decreased. C) Demand increased, and supply decreased. D) Demand decreased, and supply increased.
Voluntary agreements may not be a feasible method to internalize an externality when
A) the dollar value of the externality is large. B) the externality is negative rather than positive. C) there are significant transaction costs. D) there are high taxes on the firms that cause the externalities.
According to the Five Forces Model, there are five competitive forces that determine the level of ________ in an industry.
A. entry and exit B. product differentiation C. supply and demand D. competition and profitability