(Consider This) According to the Coase theorem:
A. government should levy excise taxes on firms that generate spillover or external costs.
B. taxes should be levied such that they change private behavior as little as possible.
C. private individuals can often negotiate their own resolution of externality problems, without
the need for government intervention.
D. private firms should not provide public goods.
Answer: C
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The slope of the consumption function is equal to
a. the change in consumption divided by the change in disposable income. b. the change in consumption divided by the change in personal income. c. the change in disposable income divided by the change in consumption. d. the change in national income divided by the change in consumption.
The long-run average cost curve is typically:
A. upward-sloping at first but then downward-sloping. B. downward-sloping at first but then upward-sloping. C. always downward-sloping. D. always upward-sloping.
The real-balance effect indicates that at higher price levels
A. the value of the dollar will increase. B. the purchasing power of money will increase. C. the real value of money holdings increase, resulting in increased saving. D. the real value of money holdings fall, resulting in decreased spending.
The price of one country's currency in terms of another country's currency is the
A. terms of trade. B. exchange rate. C. currency valuation. D. balance of trade.