The cost/benefit approach that economists agree on requires an economist to determine a quantitative cost and benefit for:
A. only tangible items.
B. everything, including life but not potential lives.
C. everything, including life.
D. everything but life.
Answer: C
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Assume that production from a automobile manufacturer caused acid rain. If the government imposed a tax on the manufacturer equal to the cost of the acid rain, the government's action would
A) externalize the externality. B) eliminate all acid rain. C) force the manufacturer to move production to another location. D) internalize the externality.
If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the unemployment rate is
A) 6.6 percent. B) 10 percent. C) 9.1 percent. D) 7.1 percent.
The sale of
A) a used textbook does enter GNP. B) a used textbook does not enter GNP, but the sale of a used house does. C) both a used textbook and a used house do not enter GNP. D) a used house does not enter GNP, but the sale of a used book does. E) the GNP does not include sale of used items priced below $1000.
If the time for an economy to self-correct is shorter than the active policy lags, then:
a. active policy should be strengthened b. active policy is likely to destabilize the economy. c. time is required to accumulate evidence that the economy is performing below its potential. d. the aggregate demand curve shifts more rapidly than the short-run aggregate supply curve. e. active policy will work better than passive policy.