An externality exists when the cost or benefit resulting from some activity or transaction is experienced by parties external to the activity or transaction.
Answer the following statement true (T) or false (F)
True
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Using supply and demand analysis, which of the following is true?
a. The burden of a tax on production cannot be determined on the basis of who actually pays the tax. b. The burden of a tax on production is always split evenly between consumers and sellers. c. Consumers bear the entire burden of a per unit tax on production. d. Sellers bear the entire burden of a per unit tax on production.
If buyers expect the price of a good to fall in the near future, we would expect that to cause the current price and the quantity traded to increase as a result
a. True b. False Indicate whether the statement is true or false
If the Federal Reserve System lowers the legal reserve requirement, it forces banks to hold repaid loans as required reserves instead of lending them again, thus shrinking the money supply
Indicate whether the statement is true or false
Gasoline prices are rising because OPEC has cut the supply of oil they are willing to sell in the world oil market. You hear someone in a restaurant say that the government should put a ceiling on the price of gasoline to protect citizens from price gouging. Discuss the pros and cons of a price ceiling on gasoline.
What will be an ideal response?