When aggregate expenditure is greater than GDP, then there will be an:
A. Unplanned increase in inventories and GDP will increase
B. Unplanned decrease in inventories and GDP will increase
C. Unplanned increase in inventories and GDP will decrease
D. Unplanned decrease in inventories and GDP will decrease
B. Unplanned decrease in inventories and GDP will increase
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One way for the government to eliminate a negative externality is to
A) charge an emissions fee. B) set an emissions standard. C) levy an effluent charge. D) All of the above.
Suppose that the EPA has proposed strict controls on the amount of sulfur that diesel fuel contains. These controls were designed to fully offset the cost of pollution generated by diesel fuel vehicles. The effect of the regulation is estimated to increase the equilibrium price of a gallon of diesel fuel by 10 cents. Assuming that the supply of diesel fuel has a positive slope and demand has a negative slope, one can infer that the EPA determined that:
A. the external cost of using diesel fuel is greater than 10 cents. B. the external cost of using diesel fuel is less than 10 cents. C. the external benefit of using diesel fuel is less than 10 cents. D. the external cost of using diesel fuel is equal to 10 cents.
You own a local sub shop in a college town. You primarily serve two groups of people: local residents (both students and other local residents) and visitors to your town. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy.
What will be an ideal response?
Why can't the nominal interest rate be negative?
What will be an ideal response?