Regarding government manipulation of the interest rate, all of these statements are correct, except:
a. To address business fluctuations, governments may reduce interest rates to induce people to borrow
b. Such manipulations may give little thought to the effects on resource allocation between present and future.
c. Economists agree with the concept of using of interest rates to allocate resources among different time periods.
d. Generally, the price system reflects public preference between present and future resource allocation.
c
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In the final two decades of the twentieth century, average per capita global income
A) decreased by approximately 6 percent. B) increased by approximately 35 percent. C) increased by more than 75 percent. D) remained relatively unchanged.
If capital demand shifts to shorter lived equipment, then
A) net investment will fall. B) net investment will increase. C) net investment will not change. D) the effect on net investment is unknown.
The progressive income tax is a money transfer system—from the taxpayer to government—and it is in the nature of this system that during recessions, less is taken from people than is taken in periods of prosperity. It is in this sense that the progressive income tax system is regarded by economists as
a. an unfair intervention in people's lives b. a countercyclical discretionary force c. a system that is unrelated to government spending d. an automatic stabilizer e. volatile and capricious
The free-rider problem plagues public goods because
A) public goods are not produced by profit-maximizing firms and hence can be produced only at a loss to society. B) once public goods are produced it is not possible to exclude anyone from consuming these goods. C) the government can refuse to serve a citizen. D) the public doesn't care about public goods.