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(1) The federal government is considering selling tracts of federally owned land to private developers and using the revenues to provide aid to victims of an earthquake in a foreign country. How would this policy affect the levels of federal revenues, expenditures, and deficits under a cash accounting system? What would be different under a capital accounting system?
(2) A government is considering paving a highway with a newly developed "wear-proof" material. Paving the highway would cost $2 billion today, but it would save $300 million in maintenance costs for each of the next 10 years. Use the concept of present value in maintenance costs for each of the next 10 years. Use the concept of present value to determine whether the project is worth undertaking if the government can borrow at an interest rate of 5 %. Is it worth it if the interest rate is 0 %? 10 % ? A politician says to you, " I don't care what the interest rate is. The project is clearly a good investment: it more than pays for itself in only 7 years, and all the rest is money in the bank." What's wrong with this argument and why does the interest rate matter?
(3) Suppose that demand for a product is Q-1200- 4P and supply is Q= -200 +2P? Furthermore, suppose that the marginal external damage of this product is $8 per unit. How many more units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.
examples of inductive method in economics
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how to produce
PIGOVIAN APPROACH Pigou assumed that the aim of social policy is to 'promote welfare'. But in order to simplifL this, he chose to restrict the range of his inquiry to
Discuss the basic features of international policy coordination. There may be two sources of interdependence between national economic policies, club goods and horizontal spill
Q. Relationship between individual preference and social choice? Social Choice is a very kindred area. Some people don't make any distinction between the two while others make.
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Q. Why does government undertake an economic activity? If ever an activity has large externality or spill over and includes a large number of people, it may be found better th
why is it important to consider the complex nature of health and health care when examining economic principles related to health care delivery?
The ABC corporation is contemplating purchasing a new computer system that would yield a before-tax return of 30 percent. The system depreciates at 10 percent a year. The after-tax
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