A political function of government is to
A) encourage the consumption of government-sponsored goods.
B) provide public goods.
C) correct for externalities.
D) encourage the workings of the price system.
Answer: A
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A) a contraction B) an expansion C) a recurrence D) all of the above E) none of the above
In constructing models, economists
A) include all independent variables. B) include all available information. C) attempt to duplicate the real world. D) make simplifying assumptions.
Which of the following is a way the government can stimulate saving?
A. Decrease interest rates B. Increase taxes C. Offering tax incentives for retirement accounts D. There is nothing the government can do to stimulate saving.
An efficient allocation of risk among employees and owners must:
A. recognize that pooling of risks is never appropriate. B. recognize that employees have full control over their output. C. take into account that performance-based incentives are the sole important component of an employee's salary. D. take into account that attitudes toward risk differ among different people.