When a negative externality is present in a market, the government should:
A. intervene if the benefit of doing so exceeds the cost.
B. always intervene.
C. intervene it if the public supports doing so.
D. never intervene.
Answer: A
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Refer to Figure 12.4. Since the housing bubble burst and the economy returned to its initial, pre-bubble level before the corrective policy changed output, the economy actually moved from ________ after the bubble burst
A) point A to point B B) point B to point D C) point A to point C D) point C to point B
An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services
a. True b. False Indicate whether the statement is true or false
OPEC successfully raised the world price of oil in the 1970s and early 1980s, primarily due to
a. an inelastic demand for oil and a reduction in the amount of oil supplied. b. a reduction in the amount of oil supplied and a world-wide oil embargo. c. a world-wide oil embargo and an elastic demand for oil. d. a reduction in the amount of oil supplied and an elastic demand for oil.
The massive increase in government spending during World War II moved the economy in the span of a few short years from mass unemployment and price stability to "overfull" employment and severe demand-pull inflation. This situation can be best characterized by:
A. an increase in aggregate supply. B. a decrease in aggregate demand. C. a decrease in aggregate supply. D. an increase in aggregate demand.