An example of an activity that is likely to generate benefit (positive) externality is
A) a well manicured lawn of your neighbor.
B) growing wild flowers on city street islands.
C) fireworks on the 4th of July.
D) an educated workforce.
E) All of the above
E
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A researcher finds that for an economy, the nominal GDP in the year 2012 equals the nominal GDP in the year 2013. He also finds that the output of the economy has been the same over the two years. A situation like this is possible only if:
A) the annual inflation rate in the economy is negative. B) the annual interest rate in the economy is negative. C) the annual interest rate in the economy is zero percent. D) the annual inflation rate in the economy is zero percent.
Suppose that a bank with no excess reserves receives a deposit into a checking account of $10,000 in currency. If the required reserve ratio is 0.20, what is the maximum amount that the bank can lend out?
A) $2,000 B) $8,000 C) $10,000 D) $50,000