Common resources and public goods have in common that they are not excludable and they are not rival in consumption
a. True
b. False
Indicate whether the statement is true or false
False
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Refer to the above figure. The market equilibrium quantity is Q1. Point Q2 represents the optimal amount of production. The government can achieve the optimal outcome by
A) setting the price at P3. B) providing a per-unit subsidy to consumers equal to P3 - P1. C) providing a per-unit subsidy to consumers equal to P2 - P1. D) establishing a tax equal to P2 - P1 per unit of the good sold.
Why is the supply of loanable funds often interest inelastic?
If the price of inputs falls and the government deficit rises:
a. Aggregate demand and aggregate supply rise. b. Aggregate demand rises, but aggregate supply does not change. c. Aggregate demand falls, and aggregate supply rises. d. Aggregate demand rises, and aggregate supply falls. e. None of the above.
The balance of payments constraint refers to the limits on:
A. exchange rate policy imposed by flexible exchange rates. B. currency convertibility observed in most developing countries. C. domestic macroeconomic policy, arising from a shortage of international reserves. D. macroeconomic policy resulting from IMF conditionality.