Who gains surplus when consumers in a market are given a Pigouvian subsidy for a positive externality?
A. Consumers
B. Producers
C. Others affected by the externality
D. Both consumers and producers gain surplus.
D. Both consumers and producers gain surplus.
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
A country has a current account surplus if
A) the value of its exports exceeds the value of its imports, assuming net income from foreign assets and net unilateral transfers have a value of zero. B) the value of its net exports of services exceeds the value of its net exports of goods. C) it receives more income from foreign assets than it pays to foreigners for foreign-owned domestic assets. D) its capital inflows exceed its capital outflows.
Suppose the domestic supply (QSU.S.) and demand (QDU.S) for bicycles in the United States is represented by the following set of equations:QSU.S. = 2PQDU.S. = 200 - 2P.Demand (QD) and supply (QS) in the rest of the world is represented by the equations:QS = PQD =160 - P.Quantities are measured in thousands and price, in U.S. dollars.After the opening of free trade with the rest of the world, if the world price of bicycles settles at $60, the United States will
A. import 60,000 bicycles. B. export 60,000 bicycles. C. export 40,000 bicycles. D. import 40,000 bicycles.
If a $50 billion decrease in investment spending causes income to decline by $50 billion in the first round of the multiplier process and by $25 in the second round, the multiplier in the economy is:
A. 2. B. 3.33. C. 5. D. 10.