The optimal collective decision rule is found where _____
a. decision-making costs are minimized
b. the sum of the external and decision-making costs are minimized
c. marginal political costs and marginal political benefits are equalized
d. external costs are minimized
b
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The total amount of money the banking system can create with an initial deposit (ID) of $10,000 and a legal reserve ratio (LRR) of 25 percent is
a. $30,000 b. $2,500 c. $7,500 d. $10,000 e. $40,000
It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?
a. This loss of jobs has been detrimental to our economy. b. The government should provide subsidies to encourage more people to become farmers. c. The reduction in the number of farmers explains the increase in the price of food. d. This is progress because freed-up labor is used to produce other goods.
If there are no fixed costs in the long run, how can it be said that economies of scale arise from spreading fixed costs over more units of output?
A. Costs of quasi-fixed inputs get spread over more units of output which drives down average cost in the long run. B. Long-run average cost falls because all fixed costs are sunk. C. Average fixed costs decline continuously as output rises. D. Economies of scale is a short run phenomenon, and so diminishing returns is the root cause of scale economies.
Private saving is positive when:
A. the government's budget is balanced. B. there is a government budget surplus. C. there is a government budget deficit. D. after-tax income of households and businesses is greater than consumption expenditures.