The sum of the value added by all firms equals total:
A. investment spending.
B. spending on capital goods.
C. value of final goods and services.
D. profits.
Answer: C
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A flat wage profile refers to
A) wage compression. B) backloaded compensation. C) an efficiency wage. D) deferred compensation.
The amount of corruption that occurs in a government is hard to measure because:
A. it is illegal, and therefore hidden. B. the benefits subtracted from the costs often go to a small number of people and distort the reality. C. its costs are mostly indirect and nearly impossible to measure. D. All of these are true.
A government policy that allows retirement savings to accumulate tax-free is an example of a policy to promote economic growth by:
A. increasing physical capital. B. increasing human capital. C. increasing the availability of natural resources. D. improving technology.
Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates aDrive-Through WindowQuick Burger Does NotOperate Drive-Through WindowQuick Burger$24,000$15,000The Sunshine Café$11,000$23,000Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome?
A. The Sunshine Café pays Quick Burger $10,500 per month not to operate the drive-through window. B. Quick Burger pays The Sunshine Café $10,500 per month to operate the drive-through window. C. The Sunshine Café pays Quick Burger $12,500 per month not to operate the drive-through window. D. Quick Burger pays The Sunshine Café $12,500 per month to operate the drive-through window.