When negative externalities are present in a market, it means that:
A. social costs are less than external costs.
B. private costs are less than social costs.
C. private costs are less than external costs.
D. external costs are equal to social costs.
Answer: B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Which of the following hinders economic freedom?
a. Lower taxes b. Regulations on emissions from automobiles c. International trade d. Secure private property rights e. A democratic government
Which one of the following statements is not true? a. There is an opportunity cost associated with setting a money supply target. b. There is an opportunity cost associated with setting an interest rate target. c. When the Fed targets the money supply, the interest rate moves in an inappropriate direction.` d. The Fed targeted the money supply in the 1980s in order to bring inflation under
control. e. The Fed targeted interest rates in the late 1980s and 1990s in order to stimulate investment and aggregate demand.
Regulators often adopt policies that benefit
A. the firms regulated rather than consumers. B. consumers and injure producers. C. no one. D. only the government.