If All University Students Had to Pay the Full Cost

question 118

Multiple Choice

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

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

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Definitions:

Federal Reserve District Bank

One of the 12 regional banks in the Federal Reserve System, operating under the supervision of the Federal Reserve Board, and helping to implement monetary policy.

Individual Bank

A single banking institution that operates to accept deposits, offer loans, and provide other financial services to its customers.

Deposits

Money placed into a financial institution for safekeeping, which can earn interest over time.

Excess Reserves

The amount of reserve funds that a bank holds beyond what is required by regulations, which can be loaned out or invested.