When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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When a Pigouvian tax is imposed, ________
A) the marginal private cost curve shifts upward B) the demand curve shifts rightward C) the marginal social cost curve shifts downward D) the marginal social benefit curve shifts downward
Why would an economist claim that "oil comes out of our minds"?
A) She wants to sound silly. B) She wants to tell lies. C) She wants to remind us that the recognition of useful resources is a product of our mental abilities. D) She wants to sound like a really big and important theorist and could not care less about the facts of the real world.
Suppose sugar and artificial sweeteners are perfect substitutes for Sam. Her indifference curves for those two goods would be
A) downward-sloping and convex to the origin. B) downward-sloping and straight lines. C) L-shaped. D) downward-sloping and concave to the origin.
A seller's reservation price is generally equal to:
A. the seller's marginal cost. B. the market price. C. the buyer's reservation price. D. the seller's average cost.