Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners
a. more willing to purchase U.S. bonds, so U.S. net capital outflow would fall.
b. more willing to purchase U.S. bonds, so U.S. net capital outflow would rise.
c. less willing to purchase U.S. bonds, so U.S. net capital outflow would fall.
d. less willing to purchase U.S. bonds, so U.S. net capital outflow would rise.
a
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Expansionary monetary policy will:
A. Reduce the lending capacity for banks. B. Raise interest rates. C. Encourage people to borrow more money. D. Reduce the equilibrium price level.
The argument that ________ receives strong support from the innovative policy response to the recent financial crisis
A) rules can be too rigid B) discretionary policies are vulnerable to the time-inconsistency problem C) money is the sole source of fluctuations in aggregate demand D) changes in policies can change the coefficients in macroeconometric models
A game is:
A. a situation in which each member of a group makes at least one decision and cares both about his own choice and about others' choices. B. describes a situation in which strategy plays a role. C. provides the foundation for understanding competition in industries with only a few producers. D. All of these are correct.
Markets and Ocean Fisheries
- In the absence of government regulation, do individuals possess property rights to fish in the ocean?
- Why are many ocean fisheries experiencing significant declines in the harvest of fish? Is this problem related to the existence of property rights?
- Why would a quota on the total catch in a fishery or shortened fishing seasons lead to too much investment in capital and an inefficient use of resources?
- Would the use of individual transferable permits result in a more efficient outcome? Explain.
- No individuals possess property rights to fish in the ocean.
- The significant declines in fish harvests are the result of increasing demand for fish, more effective technologies for catching fish, and the absence of property rights. Each individual receives all of the benefits from catching additional fish, but the cost of a depleted breeding stock is shared by all participants in the fishery.
- If there is a quota on the total catch in a fishery or a shortened season, each individual fisherman has an incentive to catch as many fish as possible in a very limited time. This encourages excessive investment in boats, nets, etc. The same total number of fish would be caught over a longer period of time at a lower cost per fish if neither of these restrictions were in place.
- With individual transferable permits, each fisherman would be able to catch a particular quantity of fish, no matter how long they spend fishing. This would provide for more effective control over the total harvest than under a fishing season of limited duration and would also provide no incentive to invest in too much capital. The sale of fishing permits would result in the most fishing being done by those who have the lowest cost of fishing.