Figure 7-3
Government provides many goods and services to the public because they are not provided by free markets. Some economists believe bureaucrats who manage the programs have no interest in maximizing net benefits (profits) but instead maximize the size of a program constrained only by the need to have total benefits exceed total costs. Figure 7-3 shows total benefits and cost curves for a program. What point is the efficient point, and what point will the bureaucrat choose?
a.
A and B, respectively
b.
B and D, respectively
c.
D and C, respectively
d.
D and A, respectively
b
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The key reason that the Soviet Union failed to develop new ways to make the economy efficient and was therefore not able to sustain economic growth was due to
A) the Soviet Union relying on entrepreneurs to develop new production technologies. B) the typical behaviors of managers and employees in a centrally planned economy. C) the failed attempt to convert to a market-based economy. D) the Soviet Union's lack of accumulating capital goods.
If deviations from trend in a macroeconomic variable are positively correlated with deviations from trend in real GDP, that variable is said to be
A) useful in predicting future movements in real GDP. B) procyclical. C) countercyclical. D) acyclical.
A financial market panic that causes US depositors to withdraw their funds from Chinese banks, would cause a(n)________ in the demand of US dollars and a(n) _________in the supply of the Chinese Yuan
a. Increase; Increase b. Increase; Decrease c. Decrease; Increase d. Decrease; Decrease
Which of the following would cause the money supply in the United States to expand?
a. A decrease in reserve requirements. b. An increase in the discount rate. c. The sale of U.S. government bonds by a Federal Reserve bank. d. An increase in the world supply of gold.