If All University Students Had to Pay the Full Cost

question 78

Multiple Choice

If all university students had to pay the full cost of their education,

• A) horizontal equity would be worsened because university students in general come from the lowest- income families.
• B) they would probably choose less education than what is socially optimal.
• C) vertical equity would be enhanced, since university students would internalize the externalities of their educations.
• D) the economic efficiency of the higher education system would be greatly enhanced.
• E) the federal debt could be eliminated.

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Definitions:

Cyclical Unemployment

Unemployment caused by a downturn in the economic cycle, such as a recession, which reduces the demand for goods and services.

Structural Unemployment

Unemployment caused by a mismatch between workers' skills and the requirements of available jobs, often due to technological or economic changes.

Frictional Unemployment

The short-term unemployment that arises from the process of matching workers with jobs, often due to workers changing jobs or entering the workforce.

Potential Output

The highest level of real GDP (gross domestic product) that can be sustained over the long term without increasing inflation.