Suppose a large tree on Jack's property blocks Amy's view of the ocean. Jack accepts Amy's offer of $2,000 to cut down the tree. This is an example of
A. internalizing externalities via voluntary agreements.
B. a consequence of a positive externality.
C. a result of logrolling.
D. a consequence of private costs exceeding social costs.
Answer: A
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If the required reserve ratio is 5%, what is the value of the simple deposit multiplier?
A) 0.05 B) 0.20 C) 5 D) 20
A consumer has preferences over two goods, X and Y. Suppose we graph this consumer's preferences (which satisfy the usual properties of indifference curves) and budget constraint on a diagram with X on the horizontal axis and Y on the vertical axis. At the consumer's current consumption bundle, the consumer is spending all available income, and the marginal rate of substitution is greater than
the slope of the budget constraint. We can conclude that the consumer a. is currently maximizing satisfaction subject to the budget constraint. b. could increase satisfaction by consuming more X and less Y. c. could increase satisfaction by consuming less X and more Y. d. could purchase more X and more Y and increase total satisfaction.
A recent push in development economics is to:
A. put more focus on a program's effectiveness. B. fund only those programs that prove to be effective. C. stop the trial and error process of funding programs that "might" work. D. All of these statements are true.
The ability to produce a good at a lower opportunity cost than others is known as
A) comparative advantage. B) absolute advantage. C) specialization. D) marginal cost production.