Question

a local government has a limited amount of money to spend. it decides to spend the money to support local businesses instead of to remove trash from unused buildings and vacant lots. which of these is the opportunity cost of this decision? tax revenue jobs for local residents a clean environment profits for business owners 5 multiple choice 2 points which of these would be an economic benefit of new homes being built in a rural area? an increased tax base a lower employment rate a smaller infrastructure an increase in farm land 6 multiple choice 2 points what consumer behavior is the federal reserve board trying to encourage when it implements a loose monetary policy? increased saving and reduced spending decreased saving and increased spending increased saving and spending decreased saving and spending

Explanation:

• Question 5:
• Opportunity cost is the value of the next - best alternative that is forgone when a decision is made.
• When the local government decides to support local businesses instead of removing trash from unused buildings and vacant lots, the alternative that is given up (the opportunity cost) is related to the outcome of trash - removal.
• Removing trash from unused buildings and vacant lots would lead to a clean environment. Tax revenue is not directly related to the alternative of trash - removal (it could be related to business support in some ways). Jobs for local residents could be created by both business support and trash - removal. Profits for business owners are a benefit of business support, not the forgone alternative.
• Question 6:
• Loose monetary policy involves actions like lowering interest rates.
• When interest rates are low, the return on savings is low. So, consumers are less likely to save (decreased saving). At the same time, borrowing money becomes cheaper (because of lower interest rates for loans), which encourages consumers to spend more (increased spending).
• Increased saving (as in options 1 and 3) is not encouraged by loose monetary policy. Decreased spending (as in options 1 and 4) is also not the goal.

Answer:

• Question 5: a clean environment
• Question 6: decreased saving and increased spending