Assume that production of a good generates external benefits for others. The equilibrium price of the good will be ____ and the equilibrium quantity ____ for efficient resource allocation
a. too high; too high.
b. too high; too low.
c. too low; too high.
d. too low, too low.
d
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An exchange rate crisis may lead to a banking crisis and disintermediation
Indicate whether the statement is true or false
If net exports are negative, then aggregate demand will be less than the sum of consumption, investment, and government purchases
a. True b. False Indicate whether the statement is true or false
The government's providing of deposit insurance and functioning as the lender of last resort has significantly:
A. increased the incentive for banks to take on risk, but has had no effect on the amount of regulation of banks required. B. decreased the incentive for bank managers to take on risk. C. increased the amount of regulation of banks required and increased the incentive for banks to take on risk. D. increased the amount of regulation of banks required, but has had no effect on bank's incentive to take on risk.
Gains from trade can only occur when
A) marginal rates of substitutions differ across people. B) marginal rates of substitution are equal across people. C) indifference curves are convex. D) people find themselves on the contract curve.