1. There is nothing wrong with the economy if a garbage collector earns more than an English teacher. The cost of any commodity, including labor, is derived from supply and demand. If the garbage collector earns more, it means that there are fewer people willing to be garbage collectors relative to the demand for garbage collectors in comparison to English teachers. This drives the cost of a garbage collector up.
             2. Direct regulation is when the government passes laws that specifically curtail the impacts of those externalities. This is a strong method of dealing with the externality and the most intrusive to the market. Incentive policies are when the government passes provides financial or other incentives to make certain options more viable for firms. This is an attempt to guide the market rather than control it, but as business decisions are often driven by government incentives such as tax policy they can be highly effective. Voluntary restrictions are the weakest method of dealing with an externality. A voluntary restriction on exports to a given market, for example, may pre-empt a stronger movement such a tariff. They can be effective but many firms may be hesitant to implement such restrictions, so they are weaker than the other methods.
             3. The total labor force includes those working plus those looking for work plus discouraged workers, so 115 + 7.5 + 3 = 125.5 million. The total unemployed persons include those who are actively seeking work, the institutional population and discouraged workers, so 7.5 + 15 + 3 = 25.5 million. The unemployment rate does not include discouraged workers or the institutional population. This is compared with the labor force minus discouraged workers. Thus the rate is 7.5 122.5 = 6.1%
             4. The percentage increase in nominal output is 0.5 12.5 = 4%. The percentage increase in the price index is 5/100 = 5%. Real output has declined by $120 billion. The percentage decline is 0.96%....