Governments usually build highways because it is difficult to exclude individuals who don't pay for the highways from using them. What type of market failure is involved?
A. Inequity.
B. Market power.
C. Externalities.
D. Public goods.
Answer: D
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A firm's labor demand curve is derived from the supply of the goods and services it produces
a. True b. False
Which of the following shifts aggregate demand to the right?
a. an increase in the price level
b. an increase in the money supply
c. a decrease in the price level
d. a decrease in the money supply
In the short run, the perfectly competitive firm will always earn an economic profit when
A) P = ATC. B) P > AVC. C) P = MC. D) P > ATC.
According to the Taylor rule, if inflation rises 1 percent above a target rate of 2 percent, the Fed should raise the federal funds rate, relative to the current rate of inflation, by:
A. 0.5 percentage point. B. 1 percentage point. C. 1.5 percentage points. D. 2 percentage points.