If there are significant excess reserves, a liquidity trap:
A. is inevitable.
B. Excess reserves and the liquidity trap are unrelated.
C. is possible.
D. cannot exist.
Answer: C
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In contrast to the need for legal enforcement under a system of direct controls, a taxes approach
A. is subject to greater uncertainty of payment of fees. B. makes taxes automatic and certain. C. speeds the prosecution and conviction process. D. does not actually reduce pollution, merely the cost of monitoring it.
Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents factor services?
A) Arrow A B) Arrow B C) Arrow C D) Arrow D
If the demand curve is the same as the marginal benefit curve and the supply curve is the same as the marginal cost curve, then the quantity at which they cross is
i. the equilibrium quantity. ii. the allocatively efficient quantity. iii. the quantity with no deadweight loss. A) i, ii, and iii. B) only i. C) only ii. D) only i and ii. E) only i and iii.
If output growth exceeds population growth for a country,
A. Average living standards will increase. B. This country must have overcome the problem of opportunity costs. C. Per capita GDP will decrease. D. GDP must have fallen at a very rapid rate.