Growing rice requires extensive irrigation in California. Economists consider water to be a ________ for rice farmers in California.
A. inferior good
B. want
C. need
D. luxury
Answer: B
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The expected effects of fiscal contraction are
a. higher real interest rates. b. exchange rate depreciation. c. increased trade deficit. d. All of the above are correct.
Air pollution is a problem because
A) people are greedy. B) people are not environmentally conscious. C) people make use of air without having to bear all the costs of their actions. D) a market economy does not provide as strong an incentive for environmental cleanup as a socialist economy.
Collateralized default swaps:
A. helped reduce the losses from the mortgage default crisis. B. involve exchanging high-risk mortgages for low-risk mortgage-backed securities. C. are loans to investors in mortgage-backed securities. D. insured holders of loan-backed securities in case the underlying loans were not repaid.
If elasticity of demand is 0.7, elasticity of supply is 0.7, and a 5 percent excise tax is levied on the good:
A. consumers pay 50 percent of the tax. B. consumers pay 5 percent of the tax. C. sellers pay 5 percent of the tax. D. sellers pay 100 percent of the tax.