If government debt is an external debt, the debt burden cannot be passed on to future generations
Indicate whether the statement is true or false
F
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In the Solow growth model, an increase in the savings rate
A) raises steady state per capita output. B) raises the growth rate in aggregate output. C) must reduce per capita consumption. D) must reduce the standard of living.
The Coase Theorem works best in places that transaction costs for contracts among people is low. Often in the world of torts and externalities both parties can claim that they have rights to impose on others. One case is that of a railroad that is noisy and scares the cattle and the rancher whose cattle sometimes wander in front of moving trains causing damage to them and the train. What does the
Coase say would happen? a. The train should have property right to be safe from wandering cattle, and the rancher should be liable for train damage of rampaging cattle. b. The rancher should have the property right to be safe from noisy trains, and the railroad should be liable for weight loss of cattle from train whistles and rumbling noise. c. If transaction costs are low, the efficient activity will occur, either the rancher or railroad installing fences to protect from rampaging cattle and/or sound insulation with trees, or if it is cheaper, fewer train trips per day. The cheapest or most efficient solution will happen, regardless of who is assigned the original property right.
According to the textbook, The Wonderful Wizard of Oz is alleged to be a story about
A) the California gold strikes of 1849. B) the end of the gold standard in 1934. C) the presidential election of 1896. D) the financial panic of 1907.
Two firms compete as a Stackelberg duopoly. The inverse market demand they face is P = 62 ? 4.5Q. The cost function for each firm is C(Q) = 8Q. The outputs of the two firms are:
A. QL = 35; QF = 6. B. QL = 6; QF = 3. C. QL = 48; QF = 24. D. None of the answers is correct.