Answer:
The correct answer is letter "B": property rights must be clearly assigned to the parties involved in the dispute.
Explanation:
Named after British lawyer and economist Ronald Coase (<em>1910-2013</em>) the Coase Theorem states when there are competitive markets and no transaction costs bargaining will lead to an efficient and mutually beneficial outcome. The theorem affirms that when property rights are defined and divided, parties will gravitate to the most efficient and beneficial outcome.
Answer:
(B) $20 billion
Explanation:
Given a certain level of MPC, an increase in government spending (G) by a certain amount translates to an increase in aggregate demand (AD) through the relationship below.

where Δ means <em>change.</em>
<em />
Therefore, given ΔAD of $50 billion, and MPC of 0.6,

= 
= 
= ΔG = 50 * 0.4 = 20
Therefore, increase in government purchases = $20 billion.
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