When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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Lindahl prices
A. result in efficient levels of public goods provision. B. require honest revelation of preferences. C. result in different prices for the same amount of output. D. cause all of these. E. none of these answer options are correct.
A regressive tax is one in which the average tax rate falls as income rises.
Answer the following statement true (T) or false (F)
The equation u2t = 
0+1u2t-1 + vt is an autoregressive model in _____.
A. ut B. u2t C. vt D. ut -1
This monopolist is
A. in the short run making a profit.
B. in the short run taking a loss.
C. in the long run making a profit.
D. in the long run making a loss.