The Clear Plastic Company's plant discharges large quantities of toxic chemicals into some groundwater sources. Residents in the surrounding area have higher medical bills because of Clear Plastic's pollution. If the firm is forced to pay the social costs of its production
A. the amount of plastic it produces will increase in order to pay the additional costs.
B. its supply curve will shift to the right.
C. the price it charges for its plastic will decrease.
D. it will produce less and charge more for its plastic.
Answer: D
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The short-run tradeoff between the unemployment rate and the inflation rate shown by the Phillips curve is represented in the AS-AD model by
A) rightward shifts of the aggregate supply curve. B) the downward-sloping aggregate demand curve. C) the upward-sloping aggregate supply curve. D) the vertical potential GDP line. E) leftward shifts of the aggregate supply curve.
Okun's law relates ________ to ________
A) inflation; unemployment B) inflation; output C) output; unemployment D) output; employment
Assume the economy is in equilibrium where real GDP equals potential GDP, and the economy experiences a negative demand shock
Describe what happens in the IS-MP model, and explain what policy the Fed could use to keep the inflation rate from changing?
The need to make choices is most closely related to the economic concept of
A) opportunity cost. B) efficiency. C) inefficiency. D) utility. E) disutility.