Under a Coase bargaining solution, deal making between the two parties continues until the marginal ________ to the harmed party equals the marginal ________ to the other party.
A. benefit; benefit
B. benefit; cost
C. cost; benefit
D. cost; cost
Answer: B
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An example of automatic fiscal policy is
A) an interest rate cut, initiated by an act of Congress. B) an increase in the quantity of money. C) a tax cut, initiated by an act of Congress. D) a decrease in tax revenues, triggered by the state of the economy. E) any change in the interest rate, regardless of its cause.
On the 45-degree line diagram, for points that lie above the 45-degree line
A) planned aggregate expenditure is less than GDP. B) planned aggregate expenditure is greater than GDP. C) planned aggregate expenditure is equal to GDP. D) planned aggregate expenditure is less than aggregate income.
Monetary policy has no effect on the equilibrium interest rate if
A) the inflation rate is zero. B) the economy is in the liquidity trap. C) velocity is constant. D) the economy is at full employment.
An individual firm in perfect competition can exercise a significant control over the market price of the good
a. True b. False Indicate whether the statement is true or false