If the production of a good generates a positive externality, then:
A. there will be deadweight loss at the market equilibrium quantity.
B. production of the good is harmful.
C. total economic surplus will be maximized at the market equilibrium quantity.
D. the government should tax producers of the good.
Answer: A
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Consider a small open economy that is in equilibrium with a current account surplus
(a) Draw a diagram showing this situation. (b) Now suppose that future income increases. Show what happens in your diagram. What happens to the world real interest rate and the equilibrium quantities of saving, investment, and the current account balance? (c) Repeat parts (a) and (b) for the case of a large open economy, showing a situation in which the home country initially has a current account surplus. Draw a diagram and describe how the rise in future income in the home country affects all four variables (the world real interest rate and the equilibrium quantities of saving, investment, and the current account balance) in both countries.
Suppose a bank has total assets of $4,000,000,000 and total deposits and other liabilities of $3,500,000,000. The bank's leverage ratio is
A) 11.2%. B) 12.5%. C) 14.3%. D) 87.5%.
If the government fiscal deficit equals $78 billion, government borrowing equals $38 million, and tax revenue equals $92 billion, what is the value of the change in the money supply?
a. $40 billion b. $132 billion c. $18 billion d. $208 billion e. $78 billion
Explain why on average the profit levels for invention and entrepreneurship are generally so low