Referring to the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, which box should be filled with the label PI for "price index?" 
A. Box 4
B. Box 6
C. Box 5
D. Box 1
Answer: D
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A contractionary monetary policy raises the real interest rate, causing the domestic currency to ________, thereby ________ net exports
A) appreciate; raising B) appreciate; lowering C) depreciate; raising D) depreciate; lowering
Where a firm generates beneficial externalities, society would be better off if
A. the firm produced a larger output level. B. the firm reduced its output level. C. a tax was levied on the firm equal to the dollar amount of the externalities. D. price was reduced below marginal private cost.
The non- free trade policy of the United States that affects many poor countries of the world the most is the
A. tariff on imported tires. B. the proposed tariff on steel. C. agricultural subsidies. D. quota on wood products.
What will arise when negative externalities are present in a market?
a) Government will regulate the externalities in the market. b) Private costs will be greater than social costs. c) The market will not be able to reach any equilibrium situation. d) Social costs will be greater than private costs.