When cost externalities exist, an optimal equilibrium can be attained if the government
A) restricts production.
B) levies a tax for the difference between private costs and social costs.
C) prohibits production.
D) All three above
E) Both A and B
E
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Speculative attacks against a currency are caused by fears of:
A. monetary policy tightening. B. exchange rate revaluations. C. exchange rate devaluations. D. balance-of-payments surpluses.
What type of spending is the largest component of the GDP?
A) investment B) net exports C) government purchases D) consumption expenditures
In the long-run equilibrium, perfectly competitive firms make zero economic profit because of
A) government regulations. B) the ability of firms to enter and exit. C) inefficient production processes. D) high fixed costs.
M1 is a definition of money largely confined to which function(s) of money?
A) unit of account B) store of value C) medium of exchange D) B and C.