With respect to events like global warming, some economists suggest using falling discount rates because
A) exponential discounting virtually gives no weight to (large) costs incurred far into the future.
B) exponential discounting weights (large) costs incurred far into the future heavily.
C) events far in the future do not affect us.
D) we should not care about costs far in the future.
A
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Which of the following is likely to happen if the Fed conducts a contractionary monetary policy?
A) Labor demand will increase. B) The nominal interest rate will decrease. C) The stock of money in the economy will decrease. D) Banks will make more loans.
Suppose there is a high inequality in household income between the highest and the lowest income groups in one country. In response, the government raises the income tax for the highest income group and provides subsidies to the lowest-income group. What
would happen to the Lorenz curve as a result of the government programs? Explain. What will be an ideal response?