Cost-benefit analysis is the public sector counterpart to ____ used in private, profit-oriented firms
a. ratio analysis
b. break-even analysis
c. capital budgeting techniques
d. economic forecasting
e. none of the above
c
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According to Okun's Law, for each 1 percentage point that the unemployment rate is above the natural unemployment rate, then
A) the inflation rate is greater than the expected inflation rate by 2 percentage points. B) real GDP is above potential GDP by 2 percent. C) real GDP is below potential GDP by 2 percent. D) the real interest rate is below the natural real interest rate by 1 percentage point. E) the inflation rate is less than the expected inflation rate by 1 percentage point.
If a good is produced by firms that incur all private and external costs, the price consumers pay
A) will be efficient since it includes all social costs. B) will be too low. C) will be too high because the consumers end up paying all of the costs instead of the firm. D) will be the correct price, but inefficient.