Andrew is willing to pay $50,000 for a college education, yet the tuition cost at the college to which he was accepted is $75,000. Under what condition would it be efficient for the government to pay for the last $25,000 of Andrew's education?
What will be an ideal response?
If the benefit to society of Andrew's education is greater than $25,000, the government should subsidize his education. For example, if it is worth $40,000 to society if Andrew attends college the benefit exceeds the cost and his education should be partly paid for by society.
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Assume that a low-wage contract is in force in the society, and the central bank follows a low-money-growth policy. Which of the following will be observed?
a. The actual inflation rate will match the low rate that people had expected. b. The actual inflation rate will be higher than the natural rate. c. The actual inflation rate will be higher than the low rate that people had expected. d. The actual inflation rate will be lower than the high rate that people had expected. e. The unemployment rate will be lower than the natural rate.
If a surplus accumulates as the result of agricultural support prices, the government must buy it; otherwise the support price cannot be maintained
Indicate whether the statement is true or false
Leverage is best defined as:
A. low interest rates at the beginning of the term of a loan that later rise. B. using friends inside the banking industry to secure loans. C. the ability of people without income to secure mortgages. D. the practice of buying an asset with borrowed money.
Which of the following variables is likely to serve as an intermediate target for monetary policy?
A. Inflation rate B. Unemployment rate C. Open-market operations D. Money supply