The presence of pollution in the trucking industry leads in the long run to dynamic inefficiencies because
A) marginal external cost rises over time.
B) marginal external cost is constant over time.
C) average private cost in trucking is lower than average social cost, so that some trucking firms remain in the industry (or are induced to enter) when efficiency calls for them to leave (or stay out).
D) average private cost in trucking is higher than average social cost, so that some firms trucking firms exit the industry when efficiency calls for them to stay (or for more firms to enter).
E) fewer resources are devoted to transportation than the economy really needs.
C
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To economize means to
A) allocate available resources in a way that yields the most value to the economizer. B) behave in a selfish rather than generous manner. C) conserve as much as possible for future use. D) put economic theory to work. E) save rather than spend.
Which of the following are included in the U.S. current account balance?
I. exports to Japan II. interest payments made to Canada III. transfer payments made to Israel A) I only B) I and II C) I and III D) I, II and III
A clear-cut "rules versus discretion" debate is no longer possible because those economists advocating rules for ________, such as ________, must leave the Fed with plenty of discretionary power
A) policy instruments, the money supply B) policy instruments, the inflation rate C) target variables, the money supply D) target variables, the inflation rate
The base year matters for the computation of real GDP because
A) otherwise we cannot compute growth rates. B) relative prices can change over time. C) it allows an international comparison of GDP. D) it establishes a target for macroeconomic policy.