Assume there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is called
A. nonexcludability.
B. nonrivalry.
C. nontaxability.
D. nondiscrimination.
Answer: A
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In the extreme case of a complete crowding-out effect
A) an increase in interest rates will stimulate investment spending. B) an increase in government spending will not increase aggregate demand. C) an increase in tax rates will stimulate work effort. D) an increase in government spending will stimulate investment spending.
Contractionary fiscal policy uses ________ government spending and ________ taxes to increase aggregate economic activity
A) lower; higher B) higher; lower C) higher; higher D) lower; lower
The default-risk premium:
A. must always be greater than 0 (zero). B. is also known as the risk spread. C. is assigned by a bond-rating agency. D. is negative for a U.S. Treasury bond.
Which of the following average cost functions suggests the presence of a natural monopoly?
A) AC = 2 B) AC = 100/Q + 2 C) TC = 100/Q + 2Q D) All of the above.