Which of the following situations is descriptive of the existence of a negative externality.
A. Vernon studies for his biology test late into the night and oversleeps the next morning, thus missing the test.
B. Nancy is in the library looking for a book. She is talking to herself and consequently disturbs a few people in the library.
C. Bob learns later that he could have purchased a pair of shoes for less than he paid.
D. Jackie has had the flu and has stayed in bed for a week.
E. none of the above
Answer: B
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One role of the interest rate is to
A) allocate capital to its most efficient uses. B) redistribute income from the wealthy to the poor. C) reduce the rate of inflation by encouraging government borrowing. D) discourage saving and encourage current consumption.
Which of the following does the long-run Phillips curve tell us?
a. That output can be below potential in the long run b. That the unemployment rate can take on any value in the long run c. That output can be maintained above potential in the long run d. That unemployment will return to the natural rate in the long run e. That the inflation rate cannot rise above 10 percent in the long run
Which of the following is included in personal income but not in national income?
a. compensation for workers b. proprietors' income c. corporate profits d. Social Security payments e. rent
People are willing to invest in human capital because
a. the demand for skilled labor is higher than for unskilled labor. b. it increases the marginal product of their labor. c. firms are willing to pay more for more productive workers. d. All of the above are correct.