Explain why environmentally minded firms in a competitive industry will find it difficult to take environmental action
Firms can survive in competition only if they operate at minimum average cost. A firm choosing a more expensive production process to reduce pollution will not be able to compete with a firm ignoring externalities. The environmentally conscious firm will lose money in the long run.
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Which of the following correctly describes the relationship between productivity growth, unemployment, and the economy's production possibilities frontier?
A) An increase in productivity moves the economy from inside the production possibilities set to its frontier. B) An increase in productivity shifts the economy from the production possibilities frontier to a point outside the production possibilities set. C) An increase in unemployment shifts the economy further inside its production possibilities set. D) An increase in unemployment shifts the economy from a point outside the production set back to the production possibilities frontier. E) A reduction in unemployment shifts the entire production possibilities frontier outward.
Goods are ________ when the income elasticity of demand is positive
A) complements B) elastic C) inferior D) substitutes E) normal
The hypothesis that changes in the money supply lead to proportional changes in the price level is called
A) the equation of exchange. B) the Keynesian multiplier. C) the theory of empirical relativity. D) the quantity theory of money and prices.
When financial markets are __________, leverage ______________; when they are _______, leverage ____________.
A. booming; multiplies the gains; crashing; magnifies the losses B. booming; magnifies the losses; crashing; multiplies the gains C. crashing; mitigates the losses; booming; mitigates the gains D. crashing; magnifies the losses; booming; mitigates the gains