A tax on polluting firms
A. would shift the LRAC curve upward.
B. would shift the LRAC curve downward.
C. would have the same impact on the firm as a subsidy.
D. tends to have the perverse effect of increasing pollution.
Answer: A
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Real GDP measures the ________ of production.
A. physical volume B. current dollar value C. change in the volume D. current market value
In which decade did the United States begin experiencing large trade deficits?
A) 1960s B) 1990s C) 2000s D) 1970s
When does the burden of a tax imposed on a good fall more heavily on sellers?
What will be an ideal response?
Figure 32-2
?
Suppose that Figure 32-2 shows the effects of reducing the budget deficit by raising taxes. If authorities do not want real GDP to fall, monetary policy must
A. become sufficiently more expansionary to restore the aggregate demand curve to D0D0. B. contract aggregate demand to be consistent with deficit-reducing fiscal policy. C. not lower interest rates and thwart the goal of a balanced budget. D. become more contractionary to lower the interest rate and spur investment.