List three possible problems that could occur when undertaking cost-benefit analysis
What will be an ideal response?
There are many possible problems that could occur when undertaking cost-benefit analysis. For example, usually cost-benefit analysis is undertaken with a project plan already in mind. If enumeration of all the possible options is not undertaken, then we might be overestimating the costs of achieving a particular policy goal. Another problem that could occur comes during the enumeration of costs and benefits stage. It is very easy to double count benefits in a cost-benefit analysis. A third possible problem can come in choosing the discount rate used when obtaining the present value of future costs and benefits. If the wrong discount rate is used in could drastically overstate or understate the future costs and benefits.
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With perfect price discrimination there is
A) an increase in consumer surplus. B) one single price. C) no deadweight loss. D) no producer surplus.
In which of the following situations would the Fed conduct contractionary monetary policy?
A) The Fed is worried that deflation will become a problem. B) The Fed fears that unemployment is climbing above the natural rate. C) The Fed believes that aggregate demand was growing too slowly to keep up with potential GDP. D) The Fed is concerned that aggregate demand would continue to exceed the growth in potential GDP.
According to the text, The American Recovery and Reinvestment Act of 2009:
A. was successful. B. was unsuccessful. C. remains hotly debated whether it was successful or not. D. is known as the most effective legislation ever passed in U.S. history.
Define the terms recessionary gap and inflationary gap. Why do they occur?
What will be an ideal response?