Which of the following best represents search costs?
A) Dinesh has to spend time and effort to make sure that the chemical factory is living up to the agreed upon bargain that it will reduce the pollution it is releasing into the local river by 50 percent.
B) Laila needs to come up with enough cash to pay the owners of the paper manufacturing plant, its attorneys, accountants, and negotiators so that a bargain can be reached with the paper manufacturer to reduce air pollution.
C) Esperanza has to spend time and effort locating and organizing all the other people who have been adversely affected by the strong odors emanating from the local slaughterhouse in order to initiate the bargaining process.
D) Rafael has to spend time determining whether the fertilizer manufacturer, the lead smelter, or the oil refinery is the cause of pollution seeping into the groundwater in his local community.
D
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Which of the following tools does the Fed use to pursue its objectives?
A) It influences short-run and long-run interest rates. B) It provides loans to new firms and businesses at extremely low rates of interest. C) It determines the efficient level of government spending. D) It influences market prices through price ceilings and price floors.
Which of the following reasons helps explain why the aggregate demand curve is downward sloping?
a. The real balances effect or wealth effect: Consumers spend more on goods and services when the price level falls because lower prices increase consumer purchasing power. b. The producer-push effect: At less than full employment, increases in quantity demanded will raise price, and thus will motivate sellers to produce more. c. The hidden inflation effect: As the price level rises, consumers fail to recognize that prices are higher, and consequently they fail to reduce expenditures on goods and services. d. None of the above.
In contrast to changes in government spending, tax changes affect spending
a. directly. b. in the same proportion. c. by a greater amount. d. indirectly.
Discretionary fiscal policy in the form of an increase in government spending or a decrease in taxes can be used to close an expansionary gap
Indicate whether the statement is true or false