In 2007-2009, the Fed Cut Interest Rates to Limit the International

question 210

Multiple Choice

In 2007-2009, the Fed cut interest rates to limit the international financial crisis.What is the effect of this on velocity?

• A)Velocity will decrease.
• B)Velocity will increase.
• C)Velocity will remain constant.
• D)Velocity is unrelated to interest rates.

Identify and explain the free-rider problem associated with public goods.

Explain the concept of the optimal level of provision for public goods.

Understand the principles behind the Tiebout hypothesis and Samuelson's theory of public expenditure.

Recognize and explain the drop-in-the-bucket problem.