An example of an activity that generates an external cost is
A) dumping soapsuds into a trout stream.
B) national defense services.
C) planting flowers along an interstate highway.
D) eating an apple.
A
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What is meant by constant returns to scale?
What will be an ideal response?
If Gambinia has many workers but very little land and even less productive capital, then, following the Heckscher-Ohlin model, in order to improve the country's economic welfare, the Gambinian government should
A) engage in free trade. B) protect the capital-intensive product. C) protect the land-intensive product. D) protect the labor-intensive product. E) discontinue all international trade.
Potential GDP is the quantity that an economy can produce by:
a. fully employing its existing levels of labor, physical capital, and technology. b. partially employing its existing levels of labor, physical capital, and technology. c. fully employing its future levels of labor, physical capital, and technology. d. partially employing its future levels of labor, physical capital, and technology.
If short-run equilibrium output equals 50,000 and potential output (Y*) equals 45,000, then this economy has a(n) ________ gap that can be closed by ________.
A. recessionary; increasing government purchases B. expansionary; increasing transfer payments C. expansionary; decreasing government purchases D. expansionary; decreasing taxes