Briefly explain how scarcity works in the public sector. Give an example that is not in the text.
What will be an ideal response?
Scarcity is present in the public sector as well as in the private sector. Public schools and public libraries come at the expense of something else. For example, if a city decides to publicly fund a new football stadium, that decision will come with opportunity costs. What else could that land be used for? What else could the tax revenues have been used for? Competition is also present in the public sector, as different government agencies compete for government funds and lobbyists compete with each other to get favored legislation through Congress.
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The outlet substitution bias is most likely to put ________ and so ________ the inflation rate
A) a downward bias into the CPI; overstate B) no bias into the CPI because it is such a small effect; have no effect on C) a downward bias into the CPI; understate D) an upward bias into the CPI; overstate E) an upward bias into the CPI; understate
Inflation decreases the growth of capital because
i. when the after-tax real interest rate falls, savings decreases. ii. velocity increases when inflation increases. iii. the higher the inflation rate, the higher is the true income tax rate on income from capital. A) i only B) ii only C) iii only D) i and iii E) i, ii, and iii
Two random variables are independently distributed if their joint distribution is the product of their marginal distributions
It is intuitively easier to understand that two random variables are independently distributed if all conditional distributions of Y given X are equal. Derive one of the two conditions from the other. What will be an ideal response?
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP remains the same and reserve-related (central bank) transactions becomes more positive (or less negative). b. Real GDP falls and reserve-related (central bank) transactions remains the same. c. Real GDP and reserve-related (central bank) transactions remain the same. d. Real GDP rises and reserve-related (central bank) transactions remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.