A student makes the following statement: "The real problem with pure public goods is that they are nonrival and nonexcludable." Explain whether you agree or disagree with the student's statement
What will be an ideal response?
You should disagree with the statement. Although pure public goods are, indeed, both nonrival and nonexcludable, the public goods problem stems from the fact that pure public goods are nonexcludable, and therefore subject to free riders. The nonrival aspect of pure public goods does not contribute to the public goods problem.
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In a closed economy:
A) consumption is equal to zero. B) investment is equal to zero. C) government spending is equal to zero. D) net exports is equal to zero. In a closed economy, without the government, the consumption expenditure equals $5,000 and the investment expenditure equals $2,000.
The simple Keynesian model assumes that
A) gross private domestic investment exceeds net investment by the capital consumption allowance. B) prices, especially the price of wages, are "sticky downward." C) there will never be any excess capacity in the short run. D) aggregate demand will always equal aggregate supply.