In a two time-period example, economic efficiency is maximized when
a. The marginal net benefits are maximized in both time periods
b. The discount rate is set equal to the marginal benefits
c. The marginal net benefit in the first time period is set equal to the present value of marginal net benefits in the second time period
d. The marginal net benefits in the first period are set equal to the discount rate in the second time period
e. The marginal net benefits in the first period are set equal to the user costs in the second time period
Ans: c. The marginal net benefit in the first time period is set equal to the present value of marginal net benefits in the second time period
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A firm is generating detrimental externalities when
A. MSC is less than MPC. B. MSC is the same as MPC. C. MSC is greater than MPC. D. MPC includes some incidental costs.
Which of the following is a correct characterization of socialism?
a. Tradition answers the basic economic questions. b. Markets are used exclusively to answer the basic economic questions. c. Central planning is seldom used to answer the basic economic questions. d. Government ownership of many resources and centralized decision-making answers the basic economic questions.
The chairman of the Federal Reserve is considered one of the most important economic positions in the world because this person has significant direct control over the conduct of:
A. fiscal policy in the United States. B. monetary policy in the United States. C. international trade policy in the United States. D. government budget in the United States.
Which of the following is not a component of aggregate demand?
a. Consumption b. Investment spending c. Government spending d. Real interest rate