Society can operate on the production possibilities curve only if it has achieved efficiency.
a. true
b. false
Ans: a. true
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If autonomous imports increase, then the aggregate expenditure curve shifts ________ and equilibrium real GDP ________
A) upward; increases B) downward; does not change C) downward; increases D) upward; decreases E) downward; decreases
Government can overcome the free rider problem by collecting taxes and using the funds to provide individuals with nonexcludable public goods that they want to buy but the market cannot provide.
Answer the following statement true (T) or false (F)
The use of the same cost of capital (risk adjusted discount rate) for all capital projects in a corporation
A) is usually the correct procedure. B) is incorrect since different divisions of the corporation may be faced with different levels of risk. C) is incorrect since different capital projects, even in the same division, may be faced with different levels of risk. D) Both B and C
An increase in government expenditures may lead people to expect that in the future taxes will rise and create greater distortions. By themselves these changes in expectations lead people to
a. raise both consumption and investment. b. raise consumption but reduce investment. c. raise investment but reduce consumption. d. reduce both consumption and investment.