The classic example of a detrimental externality is
A. education.
B. pollution.
C. discovery of an AIDS vaccine.
D. Mrs. Lewis’ prize-winning rose garden.
Answer: B
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Javier has been thinking about purchasing a bond but is afraid that the bond will lose value. He has decided to hold money instead. This is known as the
A) money balance demand for money. B) precautionary demand for money. C) transactions demand for money. D) asset demand for money.
One of the effects of a price floor (set above equilibrium price) is
A) a surplus. B) higher-quality goods are produced. C) more satisfied customers. D) all of the above E) none of the above
A $300 billion increase in government spending increases Real GDP by $1,800 billion. Assuming a constant price level, what does the government spending multiplier equal?
A) 0.17 B) 120 C) 6 D) 60 E) ?0.83
A very small percentage of GDP tends to come from the service sectors in poor countries.
Answer the following statement true (T) or false (F)