Based on this model, it is apparent that there is a
Use thefollowing information for any or all of Questions 16 through 18.
Suppose the marginal benefits and marginal costs of tire production in the U.S. are modeled as follows, where Q is in millions:
MSB = 12 – 0.4Q MPB = 12 – 0.3Q MSC = MPC = 2 + 0.1Q
a. negative production externality
b. positive external benefit
c. consumption externality measured as MEB = – 0.1Q
d. negatively sloped MEC function
c. consumption externality measured as MEB = – 0.1Q
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A trough in the business cycle occurs when
A. the inflation rate is at its lowest level. B. the natural rate of unemployment is at a minimum point. C. cyclical unemployment is at a minimum point. D. employment and output reach their lowest levels.
Based on the above table, the unemployment rate is
A) 10 percent. B) 11.1 percent. C) 7.1 percent. D) 5.4 percent. E) 8.6 percent.
In a liquidity trap situation: a. The Fed could not appreciably lower short term interest rates
b. If the Fed added reserves to the banking system, it would have little effect on investment. c. Traditional monetary policy would be relatively weak in its effects on aggregate demand. d. All of the above are true.
Refer to the diagram, in which C 1 is the before-tax consumption schedule. The consumption schedule represented by C 4 reflects:
A. a progressive tax system.
B. a proportional tax system.
C. a regressive tax system.
D. a higher MPC than is embodied in C 1