According to Ronald Coase, for a free-market economy to work efficiently, there needs to be
A. a well-developed tax code.
B. allocation of private property rights with high transactions cost.
C. allocation of private property rights with low transactions cost.
D. an autocratic form of government in the country.
Answer: C
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Which of the following groups of people will NOT be considered as employed?
A) Government representatives earning a fixed salary every month B) Housewives raising kids at home C) Paid workers in the agricultural sector of a country D) Teachers in public schools
Monetary policy affects the economy with a long lag, in part because
a. proposals to change monetary policy must go through both the House and Senate before being sent to the president. b. monetary policy works through changes in interest rates, and the Fed does not have the ability to change interest rates quickly. c. changes in interest rates primarily influence consumption spending, and households make consumption plans far in advance. d. changes in interest rates primarily influence investment spending, and firms make investment plans far in advance.
A decrease in the tax rate is more likely to increase the standard of living if the income effect of a change in the interest rate is
a. small and an increase in private saving tends to have a small impact on the capital stock. b. small and an increase in private saving tends to have a large impact on the capital stock. c. large and an increase in private saving tends to have a small impact on the capital stock. d. large and an increase in private saving tends to have a large impact on the capital stock.
In countries with low inflation:
A. M2 growth is a poor forecaster of inflation. B. M2 growth is a very strong forecaster of inflation. C. there tends to be a greater reliance on checks than electronic payments. D. money stocks are a larger percentage of GDP.