In economics, secondary effects refer to the
A) immediate and highly visible intended consequences of an action or policy change.
B) value of the goods that an individual must give up as the result of choosing an alternative.
C) indirect effects that often result from an action or policy change.
D) value of a good derived by the consumer.
C) indirect effects that often result from an action or policy change.
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When a government has decided on a permanent spending increase, a valid reason to increase borrowing rather than taxes might be to ________
A) to avoid an unnecessary stimulus to aggregate demand B) to shift the burden from domestic taxpayers to foreign bond holders C) to avoid distortions that might reduce long-run aggregate supply D) to avoid an increase in income inequality
A firm will generally believe that if it increases its spending on R&D its competitors will not follow, but if it decreases its spending they will follow
a. True b. False Indicate whether the statement is true or false
Stock analysts often argue that lower interest rates are good for the stock market. Does this argument make sense?
a. No; lower interest rates will tend to slow down the economy and this will be bad for the stock market. b. Yes; the lower rates of interest will increase the value of future income (and capital gains) and stock prices will rise to reflect this factor. c. No; the lower rates of interest will reduce the value of future income (and capital gains) and this will cause stock prices to fall. d. Yes; the lower interest rates will cause inflation and inflation is generally good for the stock market.
Compared to a monopolistic competitor, a monopolist faces
A) a more elastic demand curve. B) a more inelastic demand curve. C) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. D) a demand curve that has a price elasticity coefficient of zero.