Under laissez faire, the force that drives the economy toward an efficient outcome is
a. central planning.
b. majority voting.
c. the pursuit of self-interest.
d. altruism.
c
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What is Real Business Cycle Theory? What drives business cycles in this model? Where do these shocks come from?
What will be an ideal response?
The basic difference between the expenditure and income approaches to measuring GDP can be illustrated by transactions in the product and resource markets of the circular flow diagram
Indicate whether the statement is true or false
Identify the Marginal External Benefit (MEB) function, and briefly explain what this function is measuring.
Suppose you are a public official responsible for setting a retail disposal charge on antifreeze. Estimated marginal benefit and cost functions for antifreeze are as follows: MPB = 10.0 – 0.5Q MPC = MSC = 1.0 + 0.4Q MSB = 10.0 –1.1Q, whereMPB, MSB, and MPC are measured in dollars per gallon, and Q is in millions of gallons.
What change in monetary policy could eventually cause overborrowing and overinvestment?
(A) Contractionary policy. (B) An increase in the money supply. (C) A fall in the discount rate. (D) A decrease in the money supply.