Exhibit 20-5 Money, investment and product markets
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In Exhibit 20-5, a shift in aggregate demand from AD2 to AD3:
A. increases real GDP, and lowers the price level.
B. decreases real GDP, and lowers the price level.
C. increases real GDP, and raises the price level.
D. decreases real GDP, and raises the price level.
Answer: C
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The figure above shows the market for coffee. Coffee is a normal good. If consumers' incomes fall, the efficient quantity of coffee will ________ and the producer surplus will ________
A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase
In the long run when average total cost does not depend on the quantity of output, this is called:
A. economies of scale. B. constant economies to scale. C. diseconomies of scale. D. minimum average total cost.
If the demand for a good increases, it is likely that the demand for the factors of production used as inputs will:
A. increase. B. stay the same. C. decrease. D. None of these statements is true.
The government has identified a situation where the production of a good is creating a negative externality. The government should enact legislation to require firms to internalize the externality
A) in all such cases. B) if the benefits of doing so outweigh the costs. C) as long as it will not increase the price of the good being produced. D) as long as it will not create unemployment in this industry. E) as long as there are positive health benefits associated with this policy.