How is economics used as a policy tool?
What will be an ideal response?
Individuals, businesses, and governments use economics as a policy tool. Individuals use the economic ideas of marginal benefit and marginal cost when making decisions for such topics as attending college, paying cash or credit for a purchase, and working. Businesses also use the concepts of marginal benefit and marginal cost when making decisions about what to produce, how to produce, and even how many hours to stay open. Finally governments also use marginal benefit and marginal cost when deciding issues such as the level of property taxes, the amount to fund higher education, or the level of a tariff on Brazilian ethanol.
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The national debt is
A. The accumulation of all annual deficit and surplus flows. B. A fairly risky asset that pays interest. C. The amount by which government spending exceeds tax revenues for a given year. D. The amount by which tax revenues exceed government spending for a given year.
If real GDP equals 5,000, nominal GDP equals 10,000, and the price level equals 2, then what is velocity if the money stock equals 2,000?
A. 5 B. 2.5 C. 10 D. 2
Answer the following statement true (T) or false (F)
1) The larger the number of firms and the less the degree of product differentiation, the greater will be the elasticity of a monopolistically competitive seller's demand curve. 2) The economic profits earned by monopolistically competitive sellers are zero in the long run. 3) The excess capacity problem associated with monopolistic competition implies that fewer firms could produce the same industry output at a lower total cost. 4) The demand curve of a monopolistically competitive firm is more elastic than that of a pure monopolist.
Suppose a city has 20 citizens. The first 10 citizens each derive marginal benefit from traffic lights according to the function MB = 10 - Q, and the remaining 10 citizens each derive marginal benefit from traffic lights according to the function MB = 20 - Q. If traffic lights cost $20 each to produce, what is the efficient quantity of traffic lights?
A) 14 traffic lights B) 16 traffic lights C) 12 traffic lights D) 9 traffic lights