Competitive markets result in allocative efficiency because they
A. exhaust all possible benefits for the consumer.
B. exhaust all possibilities for mutually beneficial trade.
C. distribute resources in the most equitable way.
D. generate all possible benefits for the consumers.
Answer: B
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An externality can be a
A) cost or a benefit. B) benefit but not a cost. C) cost but not a benefit. D) marginal cost but not a total cost.
If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run, the economy would experience
A) an increase in the natural rate of unemployment. B) stagflation. C) long-run economic decline. D) hyperinflation.
About 35,000 general aviation multiengine airplanes are licensed to operate in the United States. If an additional $1,000-per-year tax was levied on each plane to raise general revenue, economic thinking suggests the
a. annual revenue from this tax would be less than $35,000,000. b. annual revenue from this tax would be $35,000,000. c. annual revenue from this tax would be more than $35,000,000. d. number of airplanes would increase dramatically.
Suppose an economist is analyzing the impact of a debt and its ability to be paid. That economist will focus on
A. both the ratio of the debt to GDP and the interest payments as a percentage of GDP. B. strictly the debt. C. strictly the ratio of the debt to GDP. D. strictly the inflation-adjusted amount of debt.