Why is national defence provided by the government?
a) Free riders make it difficult for private markets to supply the socially optimal quantity.
b) It is impossible for private markets to produce public goods.
c) If the good were produced in private markets, most likely too much of the good would be produced.
d) Products provided by the government can be produced more efficiently.
Answer : a) Free riders make it difficult for private markets to supply the socially optimal quantity.
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For the federal deficit to be lowered,
A) the federal government must decrease its spending and increase net exports. B) the federal government's expenditures must be lower than its tax revenue. C) the Federal Reserve must reduce the money supply. D) the Federal Reserve must raise interest rates and lower the required reserve ratio.
"Shoe-leather costs" refer to
A) a cobbler's payment for leather. B) "rubber costs" on today's shoes. C) the inconvenience imposed by higher interest rates. D) financial deregulation of retail business firms.