An example of a situation in which the social costs are greater than the private costs would be
A) a new restaurant takes business away from an established restaurant.
B) hand-held calculators putting slide rule manufacturers out of business.
C) when a member of a rock band's ability to hear deteriorates from performing in so many loud concerts.
D) a physician who cannot examine patients with a stethoscope in an examination room adjacent to an airport.
D
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
In developing countries, exchange rates tend to be
A) floating with some government intervention. B) pegged. C) hard to tell from the data. D) run by currency boards. E) flexible.
The severe oil shortages of the 1970s in the US created:
A. cost push inflation. B. demand pull inflation. C. a recession. D. an increase in the velocity of money.
Which of the following stresses the inability of the government to improve short-run market outcomes?
A. Monetary policy B. New classical economics C. Supply-side policy D. Fiscal policy