Suppose a policy change generates $200,000 of benefits for low-income families and $175,000 of costs for high-income and middle-class families. We can best describe the change as
A. potentially efficient.
B. equitable.
C. Pareto efficient.
D. inefficient.
Answer: A
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Forward and spot exchange rates
A) are necessarily equal. B) do not move closely together. C) are always such that the forward exchange rate is higher. D) move closely together and are equal on the value date. E) are unrelated to the value date.
Assume that initially, the risk premium, ? = 0 and that the domestic and foreign interest rates are given by R = .06, R* = .05
Suppose that the risk premium depends linearly on the difference between domestic government debt, B, and domestic assets of the central bank, A, i.e., ? = Find the new domestic interest rate if a sterilized purchase of foreign assets adjusts A s.t. (a) B - A = -.01/ (b) B - A = .01/ (c) B - A = .03/
Of the following, which is not an economic rationale for public utility regulation?
a. production process exhibiting increasing returns to scale b. constant cost industry c. avoidance of duplication of facilities d. protection of consumers from price discrimination e. none of the above
All else equal, when a monopolist increases its price, revenue will fall because of the lost sales
a. True b. False