In the short-run Keynesian model where the marginal propensity to consume is 0.75, to offset an expansionary gap resulting from a $1 billion increase in autonomous consumption, taxes must be:
A. decreased by $1.33 billion.
B. increased by $1 billion.
C. increased by $1.33 billion.
D. decreased by $1 billion.
Answer: C
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An increase in the price level means that
A) long-run aggregate supply has increased. B) monetary policy has been contractionary. C) the value of the dollar has increased. D) the purchasing power of money has fallen.
Which of the following is true of an externality?
a. An externality enhances the efficiency of the market system. b. An externality is not an economic problem because it is external to the market. c. An externality is a cost borne by the people who are directly or indirectly involved in the production of a good or service. d. An externality accrues to someone who had nothing to do with the production or consumption of a good or service. e. An externality refers to some unexpected change in the equilibrium price or quantity of a product.
Third parties can be unintentionally affected by the market activity of others
Indicate whether the statement is true or false
An import ban on sugar decreases the price of sugar, decreases the quantity of sugar, and increases the output of the domestic sugar industry.
Answer the following statement true (T) or false (F)