Generally speaking, the Tiebout model is _____
a. the idea that intergovernmental competition reveals consumer preferences for public goods
b. the idea that the lack of mobility can be offset by intergovernmental comparison
c. the idea that intergovernmental competition is Pareto superior
d. the idea that mobility is not necessary to intergovernmental competition
a
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With defined property rights, an externality
A) can only be corrected with government intervention. B) will not lead to a misallocation of resources. C) may be internalized with voluntary contracting, under certain circumstances. D) must lead to society producing inside its production possibilities frontier.
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and net nonreserve-related borrowing/investing in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP remains the same and net nonreserve-related borrowing/investing becomes more negative (or less positive). b. Real GDP rises and net nonreserve-related borrowing/investing becomes more negative (or less positive). c. Real GDP falls and net nonreserve-related borrowing/investing becomes more positive (or less negative). d. Real GDP and net nonreserve-related borrowing/investing remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.