When parents inoculate their children from communicable diseases prior to sending them off to school they not only provide their own children a benefit but also bestow a benefit on every other student at the school
There are now fewer students who can pass on these types of diseases. However, parents are not likely to take into account the fact that their actions create this external benefit. Therefore, economists argue that the market on its own may not provide for the optimal level of inoculations. What methods might work to get parents to take into account the external benefit when deciding whether to inoculate their children?
One possibility would be for the government to subsidize the inoculations or otherwise provide some kind of tax credit for doing so.
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China began pegging its currency, the yuan, to the dollar in 1994
Because the yuan has been ________ at the pegged exchange rate, the Chinese government ________ its reserves of dollars as the government purchased more ________ to maintain the pegged exchange rate. A) undervalued; decreased; yuan B) overvalued; increased; yuan C) undervalued; increased; dollars D) overvalued; decreased; yuan
Explain what role money illusion plays in determining the Fed's ability to affect output in the short run
What will be an ideal response?