Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit
Social Security and Medicare payments will likely rise, in part due to medical advances and greatly increased life expectancies for the elderly. People are having fewer children, which reduces the number of people in the work force. Government expenditures on healthcare will also likely rise, in part because medical advances provide new and better but often more expensive treatment options.
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Refer to Figure 28-9. A follower of the new classical macroeconomics would argue that a contractionary monetary policy to lower inflation after a supply shock, like that pursued by Volcker in 1979, would result in a movement from
A) C to D to A. B) A to B. C) C to A. D) A to C. E) A to D to C.
Explain what is meant by the term coordination failure and provide an example
What will be an ideal response?
Which of the following can be a barrier to entry, closing a market to new firms?
A) an elastic industry demand curve B) control of a vital resource by one producer C) diseconomies of scale D) ease of obtaining capital financing
If there are external costs of production not accounted for, then marginal
A. social cost is zero. B. cost equals marginal social cost. C. cost is greater than marginal social cost. D. cost is less than marginal social cost.