Two reasons why the Social Security system nearly went bankrupt in the early 1980s are: (i) wages were indexed but benefits were not; (ii) the percentage of elderly people in the country declined
a. i and ii
b. i but not ii
c. ii but not i
d. neither i nor ii
d
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Veruca sells therapeutic bath salts on the Internet. Her annual revenue is $52,000 per year, the explicit costs of her business are $14,000, and the opportunity costs of her business are $17,000 per year
What are the implicit costs of her business? A) $14,000 B) $17,000 C) $21,000 D) $31,000
If the government wants to generate a surplus as a contraction measure, the most effective method of doing so is to
a. hold taxes and decrease spending. b. increase taxes and hold or decrease spending. c. decrease both spending and taxes. d. increase both taxes and spending.
Identify the best reason for regulating a natural monopoly
a. A natural monopoly can serve the entire market at a lower average cost than if two or more smaller firms split the market and compete against each other. Thus consumers can benefit from the existence of monopoly, and regulators must protect consumers by regulating the monopoly's price. b. A natural monopoly is a high-cost producer that creates significant employment opportunities in an economy. Thus regulators must protect them from competition. c. A natural monopoly is a large firm whose production depends largely on the natural resource endowment in a country. Regulators must control the prices of their products to help them maintain the high cost of sustainable resource management. d. A natural monopoly is a large firm that creates negative production externalities in an economy. Thus regulators impose lumpsum taxes on their produce and redistribute the proceeds to correct these negative externalities.