Normative economic analysis tends to
A) generate testable hypotheses.
B) include the way someone thinks things should be or ought to be.
C) involve descriptive statements.
D) lead to empirical testing of data.
Answer: B
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A marketable permit
A) allows firms to pollute all they want without any cost. B) allows firms to buy and sell the right to pollute at government controlled prices. C) eliminates pollution by setting the price of pollution permits above the marginal cost of polluting. D) allows firms to buy and sell the right to pollute. E) is the Coase theorem solution to pollution.
Expansionary monetary policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be ________ and real GDP to be ________
A) higher; higher B) higher; lower C) lower; lower D) lower; higher
The consumption function will shift upward if real asset and money holdings:
a. increase, if people expect prices to increase, if interest rates decrease, and if taxes decrease. b. increase, if people expect prices to increase, if interest rates increase, and if taxes increase. c. increase, if people expect prices to increase, if interest rates increase, and if taxes decrease. d. decrease, if people expect prices to decrease, if interest rates decrease, and if taxes decrease. e. decrease, if people expect prices to increase, if interest rates increase, and if taxes decrease.
In perfect competition, the buyers are usually looking for
a. easy entry b. familiar brands c. higher-quality goods d. volume discounts e. the lowest price