Explain why the long-run aggregate supply curve is vertical
What will be an ideal response?
The long-run aggregate supply curve is vertical because in the long run, changes in the price level do not affect the number of workers, the capital stock, or technology, which are the factors that determine potential GDP.
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Which of the following has also been called the command and control approach?
A. Direct controls B. Voluntary compliance C. Tradable emissions permits D. Taxes on pollution
If the nominal interest rate is 10% and expected inflation is 5%, the real expected interest rate is
A) 15%. B) -5%. C) 5%. D) 10%.
Each year around July 4 the town of Flagston has a controversy over how big a fireworks display they should have on the holiday. The three citizens have the demand functions for fireworks that are shown here. The cost per firecracker is $18. Elmer has the demand function P = 20 - Q. Ethel's demand equation is P = 12 - .6Q, and Edith has the demand P = 8 - .4Q.Draw a graph of the individual demand equations and the total community demand for fireworks. Sketch in the marginal cost function as well.
What will be an ideal response?
If benefit functions for a public good could be identified accurately, incremental benefits would be measured as
a. the area under the MSB function between the pre- and post-policy abatement levels. b. the area under the TSB function between the pre- and post-policy abatement levels. c. a horizontal distance on the MSB model corresponding to the pre- and post-policy abatement levels d. none of the above