Problem Problems and Applications 34.10
Suppose government spending increases. Would the effect on aggregate demand be larger if the Federal Reserve held the money supply constant in response or if the Fed were committed to maintaining a fixed interest rate? Explain.
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Exam 5 - lecture 5 Public goods o goods that are both non-rival in consumption and non excludable o Non-rival in consumption- good for which one person’s benefit does not reduce the benefit available to others o Non-excludable- good for which the supplier cannot prevent non-payers from obtaining benefits o Free rider problem The inability of potential providers of a good or service to obtain payment from those who benefit Problem: private firms will not sell goods that are non-excludable Solution: gov’t must provide public goods such that MSB = MSC o Example of a public good: A study group must decide how man
Textbook: Principles of Economics
Author: N. Gregory Mankiw
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