Consider a market in which there is an external benefit. The inefficient market equilibrium is such that
A) too little output is produced.
B) too much output is produced.
C) price is too high.
D) marginal social cost is greater than marginal social benefit.
A
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Expansionary policies are policies designed to
A) reduce the level of real GDP. B) increase the level of real GDP. C) reduce the federal deficit. D) decrease government spending.
Along a curve, when one variable increases, the other variable decreases. The curve showing this relationship
A) might be horizontal. B) has a positive slope. C) has a negative slope. D) has an increasing then a decreasing slope.
Between 2015 and 2016, if an economy's exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?
A) The increase in exports is offset by the decrease in imports, so there is no change in net exports and no effect on GDP. B) Net exports will decrease GDP by $8 billion. C) Net exports will increase GDP by $8 billion. D) Net exports will increase GDP by $16 billion.
Lower rates of inflation increase planned spending because:
A. the Fed reacts to the lower inflation by lowering interest rates. B. resources are redistributed from high-spending households to low-spending households. C. the reduction in wealth, resulting from the reduced real value of money, restrains spending. D. the prices of domestic goods sold abroad increase (with a constant exchange rate).