Answer the Question on the Basis of This Table Showing

question 131

Multiple Choice

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community. No vote trading is allowed. If the tax cost of this proposed project is $600 per person, a majority vote will

• A) defeat this project and resources will be underallocated to it.
• B) defeat this project and resources will be allocated efficiently.
• C) pass this project and resources will be overallocated to it.
• D) defeat this project and resources will be overallocated to it.

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Definitions:

Full Employment GDP

Full Employment GDP is the output level produced by an economy when all its labor and resources are employed at their maximum efficiency.

Multiplier

refers to a factor by which an initial change in spending will ultimately change the total economic output more than the initial amount.

Multiplier

In economics, a factor by which an initial change in spending will alter total economic output due to follow-on effects.

Inflationary Gap

A situation where the total demand in an economy exceeds the total supply at the current price level, often leading to inflation.