Select the answer which best completes the following statement: "at any point along the long-run aggregate supply curve…"
A. expected inflation equals current inflation and current output is below potential output.
B. the economy is moving toward its potential output level.
C. expected inflation is moving toward current inflation.
D. current output equals potential output and expected inflation equals current inflation.
Answer: D
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A benefit-based standard
a. is one that balances social benefits with social costs, at the margin b. achieves allocative efficiency c. achieves a cost-effective level of pollution abatement d. is set to improve society’s well-being without consideration for costs
A decrease in the price level in the United States will have what effect on the aggregate expenditure line?
A) Aggregate expenditure will shift downward. B) Aggregate expenditure will shift upward. C) Aggregate expenditure will become steeper. D) Aggregate expenditure will not be affected by a decrease in the price level in the United States.
If the market price is $5 and you are currently producing at a level where average total cost is $3 and falling, you should:
a. b or c, it doesn't matter. b. shut down. c. produce only enough to cover variable costs. d. produce where MR = MC. e. produce until the average total cost and average revenue are equal.
A positive externality arises in a situation where a third party, who is not part of a market transaction, _____
a. fails to allocate resources efficiently b. suffers from a market transaction by others c. benefits from a market transaction by others d. pays a pollution tax to balance social costs