Whenever the benefits of group effort fall on every member of a large dispersed group, regardless of individual contributions, there can be a
A. negative externality.
B. free-rider problem.
C. spillover effect.
D. sudden-damage effect.
Answer: B
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The life-cycle theory of consumption predicts that when a person anticipates a higher income in the future, then that person will
A) consume more and save less in the current period. B) consume less and save more in the current period. C) consume less and save less in the current period. D) not change the amount of consumption or saving in the current period.
The purchase of a new scanner by a computer graphics business is included in which expenditure category of GDP?
a. consumption b. investment c. government purchases d. net exports
The figures below illustrate a situation of a trade embargo. In Figure (a) Dd and Sd are the domestic demand and supply curves of the embargoing countries. Prior to the embargo there was free trade at the world price of P0.
As a result of this embargo, the world as a whole loses Area
A. (a + b + c + d). B. (a + c). C. a. D. (b + c).
Economic contractions during the period from 1950 to 2007
A. were more frequent than prior contractions. B. were shorter than prior contractions. C. produced larger increases in unemployment than did prior contractions. D. were deeper (in terms of Real GDP) than prior contractions.