Comment on the following statement: "The Coase theorem implies that the contending parties will come to the efficient solution regardless of where rights are initially assigned."
What will be an ideal response?
The statement is true. Suppose one individual likes it quiet while his neighbor likes loud music. If the individual has the right to a quiet environment, his neighbor can pay him to allow some noise. On the other hand, if he has no right to a quiet environment, he can pay his neighbor to refrain from making noise.
Economics
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When the LM curve is horizontal,
A) fiscal policy has no impact on equilibrium income. B) fiscal policy has no impact on the equilibrium interest rate. C) the economy is at full employment. D) monetary policy has no impact on equilibrium income.
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Under what circumstances does purchasing-power parity explain how exchange rates are determined, and why is it not completely accurate?
Economics