Refer to the above figure. An external benefit exists. The amount of that benefit is represented by
A. P3.
B. P4.
C. the vertical distance between D1 and D2.
D. the distance between G and F.
Answer: C
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The best definition of inflation is
a. a temporary increase in prices. b. an increase in the price of one important commodity such as food. c. a persistent increase in the general level of prices as measured by a price index. d. an increase in the purchasing power of the dollar.
The fiscal policy action most likely to increase consumer spending would be _____.
a. increasing the individual income tax rate b. decreasing the individual income tax rate c. increasing the business tax rate d. decreasing the business tax rate
Pollution is an example of a ________ externality
A) negative production B) positive production C) negative consumption D) positive consumption E) Coasian
A rise in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________, everything else held constant
A) rise; LM; right B) rise; IS; right C) fall; IS; left D) fall; LM; left