Unintended costs that are imposed in third parties as a result of an economic activity are called:
a. marginal costs.
b. direct costs.
c. negative externalities.
d. positive externalities.
e. positive costs.
c
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The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A
Economists who believe the supply-side effects of tax cuts are small essentially believe that
A) tax cuts mainly affect aggregate demand. B) tax cuts will result in relatively small changes in the price level. C) tax cuts mainly affect aggregate supply. D) tax cuts will increase the quantity of labor supplied.
One of the differences between microeconomics and macroeconomics is the use of fiscal policy. Fiscal policy is conducted by:
a. local banks. b. a nation’s central bank. c. a nation’s legislative body. d. a state’s legislative body.
The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:
A. military goods and capital goods. B. services and nondurable consumer goods. C. clothing and education. D. capital goods and durable consumer goods.