The government of Southland wants to improve resource allocation in the country. Which of the following actions by the Southland government is most likely to accomplish this?
A. Weakening enforcement of laws and contracts.
B. Promising to cover every risk of loss for private firms.
C. Coercing all firms to innovate and invest.
D. Taxing polluters and subsidizing firms that are creating significant positive externalities.
Answer: D
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The potential total output combinations of any two goods for an economy, given the available factors of production and the available production technology that firms use to turn their inputs into outputs, is shown by a ______.
a. factor market analysis b. simple circular flow model c. production possibilities curve d. volatility coefficient
Suppose that Canada can produce 15 units of timber or 3 units of grain. Suppose that Mexico can produce 6 units of timber or 2 units of grain. Which of the following is CORRECT?
A) Mexico has a comparative advantage in grain production. B) Mexico has an absolute advantage in timber production. C) Canada has a comparative advantage in grain production. D) The countries would find trade mutually beneficial at a trading ratio of 1 grain for 2 timber.
According to the rational expectations hypothesis, monetary policy can have effects on such variables as real Gross Domestic Product (GDP) in the short run
A. only when the policy is anticipated. B. only when the policy is unsystematic and unanticipated. C. when the central bank implements policy actions as anticipated. D. regardless of whether the policy is anticipated or unanticipated.
The average sale price of a home in the United States increased from $207,000 to $297,000 from 2000 to 2005. All else equal, we would expect that during the same time the quantity of new homes supplied
A. did not change. B. also increased. C. decreased. D. changed directly in proportion to changes in the population.