In a two-period model, holding everything else constant, an increase in current-period income
A) unambiguously increases the current account surplus.
B) unambiguously decreases the current account surplus.
C) has an uncertain effect on the current account surplus.
D) has no effect on the current account surplus.
A
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In the coordination failure model, increasing returns to scale are best explained by strategic
A) mismanagement. B) complementarities. C) substitutabilities. D) collusion.
The first banking crisis of the 1930s was probably caused by
a. low farm prices. b. the stock market crash. c. antagonism between Wall Street banks and Main Street banks. d. Bank of England attempts to preserve the gold standard by raising interest rates.
In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits
a. diseconomies of scale because total cost is rising as output rises. b. diseconomies of scale because average total cost is rising as output rises. c. economies of scale because total cost is rising as output rises. d. economies of scale because average total cost is falling as output rises.
There are two coal-burning electrical utilities-one in tiny, rural Moscow, Idaho, and another in metropolitan Detroit, Michigan-and each produces the same amount of pollution per unit of output. If a permit tax is going to be used to force these firms to internalize pollution costs, the tax levied should be
A. higher in Detroit than in Moscow. B. less than zero in each area. C. the same in each city. D. higher in Moscow than in Detroit.