New homes built by the airport suffer from noise pollution created by a change in air-traffic patterns. If compensation is paid to the homeowners, _____
a. they will internalize the externality
b. they will use the money to buy soundproofing for their homes
c. it should be equal to the marginal cost of their harm
d. it will reduce or eliminate any incentive to avoid the problem
d
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The existence of automatic stabilizers will
A) cause the effects of shocks to aggregate demand to have a larger effect on GDP. B) reduce the recognition lag of discretionary fiscal policy. C) eliminate recessions. D) reduce the size of recessionary and inflationary gaps.
The present value of $50 to be received next year is $40. The interest rate is
A) 10 percent. B) 20 percent. C) 25 percent. D) 50 percent.
Refer to Figure 4-18. How much of the tax is paid by buyers?
A) $8 B) $5 C) $4 D) $3
The historical record indicates that foreign aid has
a. played a major role in helping formerly poor countries grow rapidly and achieve high income levels. b. re-enforced corrupt governments and policies that stifle productive activities. c. helped poor countries escape counterproductive policies imposed by authoritarian political leaders. d. promoted economic growth, but slowed the movement toward political democracy.