Ronald Coase is famous for the Coase Theorem, which is based on the premise that there is an economically efficient level of pollution reduction
Many economists believe that the tradable emissions allowance program that has been used to deal with the problem of acid rain has been successful in reducing emissions of sulfur dioxide in an economically efficient manner. Why isn't this program an example of the Coase Theorem?
The Coase Theorem states that if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities. Tradable emissions allowance programs are one type of market-based solution to the problem of negative externalities, but these programs are initiated by government, not private parties.
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The nominal GDP of the U.S. in 2015 was approximately $17.3 trillion. This means that
A) total income in 2015 was around $17.3 trillion. B) total spending in 2015 was around $17.3 trillion. C) the value of output in 2015 was around $17.3 trillion. D) all of the above are true.
If households save $30 billion more at each level of income and the marginal propensity to consume (MPC) is 0.9, the aggregate expenditure line will _____
a. intersect the 45-degree line at a real GDP of $30 billion b. shift upward by $30 billion c. shift downward by $30 billion d. shift upward by $300 billion because of the multiplier effect e. shift downward by $300 billion because of the multiplier effect
If an economy is operating inside its production possibilities curve for tanks and bread:
a. scarcity does not exist b. all resources are being used efficiently. c. production of bread can only increase by sacrificing the production of tanks. d. production of bread and tanks can both increase.
When the economy is creating less output than its potential, it means:
A. contractionary policy needs to be enacted. B. there are some resources that are unemployed. C. governments are likely to reduce their spending. D. the economy is in an economic boom.