An example of a negative externality in consumption is
A. A power plant's release of thermal pollution into a nearby river.
B. A large cattle farm creating air pollution.
C. A passenger on a train littering.
D. You finishing college and contributing to society.
Answer: C
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In the simple deposit expansion model, a decline in checkable deposits of $500 when the required reserve ratio is equal to 10 percent implies that the Fed
A) sold $500 in government bonds. B) sold $50 in government bonds. C) purchased $50 in government bonds. D) purchased $500 in government bonds.
What is the Economic Freedom of the World index designed to measure? What will determine whether the rating of a country will be high or low on this index?
Suppose the economy is operating below its full employment level. The Fed
A. can move the economy toward the full employment level by expanding the money supply to increase aggregate supply. B. can move the economy toward the full employment level by expanding the money supply to increase aggregate demand and to hold prices constant. C. can move the economy toward the full employment level by expanding the money supply to increase aggregate demand through both its direct and its indirect effects. D. is powerless to affect either aggregate demand or aggregate supply. Fiscal policy is needed.
Refer to the diagram. If actual production and consumption occur at Q 1 :
A. efficiency is achieved.
B. consumer surplus is maximized.
C. an efficiency loss (or deadweight loss) of b + d occurs.
D. an efficiency loss (or deadweight loss) of e + d occurs.