Which of the following is not a source of technological advancement for a producer?
A) better trained workers
B) more efficient physical capital
C) higher skill level of managers
D) outsourcing some aspect of production
Answer: D
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Suppose you and I are identical. We put up fireworks in our adjacent backyards on a national holiday, and we can both enjoy each other's fireworks. a. Can you identify an externality? b. Can you identify any missing markets? c. Do you think we will provide more or less than the efficient number of fireworks? d. If we could vote on a tax to be imposed on us fund fireworks in our back yards, would we vote for a lump sum tax (imposed equally on both of us) that will cause more fireworks to be put up than what we would put up on our own? e. Suppose instead the government implements a Pigouvian subsidy. How would the number of fireworks compare to what would happen in (d)? How much of a subsidy would you think we would both get for every dollar of fireworks each of us individually buys?
What will be an ideal response?
Fractional reserve banking
(a) destroys money. (b) requires banks to engage in 100 percent of total banking activities. (c) allows banks to create money while requiring them only to hold a fraction of money. (d) all of the above.
Suppose the official gold value of the Brazilian real changes from 457 reals per ounce to 528 reals per ounce. We can then say that:
a. the Brazilian real has been devalued. b. the Brazilian economy is expected to experience rapid inflation. c. gold has been devalued. d. the Brazilian real has appreciated in value. e. gold is now cheaper to purchase in Brazil than it was before.
What are the two theories about how expectations are formed? Discuss each