The notion that trade policy often imposes costs on large numbers of people, and benefits only a few is explained by
A. the basic impossibility of the democratic system to reach a fair solution.
B. the problem of collective action.
C. the power of advertisement.
D. the lack of political involvement of the public.
Answer: B. the problem of collective action.
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Which of the following would an economist classify as physical capital?
a. 100 shares of IBM stock b. a $50 bill c. a credit card d. a lawyer's computer
According to the principle of egalitarianism:
A. society should place equal weight on the well-being of every individual. B. society should place all weight on the well-being of its worst-off member. C. society should place all weight on the well-being of its best-off member. D. equal division of society's resources among all members of the population is the most equitable outcome.
Because of the multiplier, a one-time change in expenditure will...
a) have little secondary effect on real GDP b) expand real GDP by an infinite amount c) generate more additional real GDP than the initial change in expenditure d) decrease saving and investment activity and thereby decrease future real GDP
Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential