If the marginal social cost of a television exceeds the marginal social benefit of a television, it would increase society's total surplus to decrease production of televisions
Indicate whether the statement is true or false
TRUE
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
A relatively flat LM curve implies that wide fluctuations in the goods sector cause
A) wide fluctuations in real output. B) wide fluctuations in the price level. C) wide fluctuations in the interest rate. D) crowding out of private investment.
Suppose the number of pesos per U.S. dollar is 3 . The aggregate price level in Mexico is 90, and the real exchange rate between the two countries is 2 . The aggregate price level in the United States is _____
a. 60 b. 45 c. 50 d. 55
Suppose there are two small island countries: Avarice, which is populated by people who are completely self-interested, and Altruism, which is populated by people who have adopted social norms of generosity and cooperation. Commitment problems will be:
A. prevalent on both islands. B. largely avoided in Avarice, but prevalent in Altruism. C. largely avoided in Altruism, but prevalent in Avarice. D. largely avoided on both islands.