The market system does not produce public goods because:
A. there is no need or demand for such goods.
B. private firms cannot stop consumers who are unwilling to pay for such goods from
benefiting from them.
C. public enterprises can produce such goods at lower cost than can private enterprises.
D. their production seriously distorts the distribution of income.
Answer: B
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Suppose First National Bank makes a one-year simple loan of $1,000 at 7% interest to Harry's Restaurant. At the end of one year Harry's Restaurant will pay First National
A) $934.58. B) $1007. C) $1700. D) $1070.
If an economy's actual GDP exceeds its potential GDP, _____
a. wages and prices must fall b. self-correcting forces will shift the SRAS curve to the left c. self-correcting forces will shift the AD curve to the left d. inflation will occur when AD shifts to the left e. unemployment is likely to be unusually high