Suppose a professor announces at the beginning of a course that he will give no failing grades because they are too damaging to self-esteem. How does such a policy affect equality and efficiency?
Equality increases, since the spread of grades now ranges from A to D, rather than A to F. Efficiency decreases, since student effort may decline. Those students who just want to pass the course need make no effort at all. (Beyond the subject is whether giving someone something for nothing increases self-esteem over the long run.)
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In economics, the optimal level of pollution is the level for which the net benefit from reducing the pollution is the greatest
Indicate whether the statement is true or false
Moving upward along an LM curve, velocity ________ because ________ remains constant while ________ rises
A) rises, real balances, real income B) rises, the interest rate, the price level C) rises, the interest rate, real balances D) falls, real balances, real income E) falls, real income, real balances