When a polluter has to bear the full social cost of their actions, they will
A. will always decide to reduce the amount of pollution by reducing the quantity they produce.
B. weigh the costs and benefits of each potential action and might decide to not stop polluting by paying a fine.
C. go out of business since pollution abatement is expensive.
D. increase the price of the product and the quantity produced to pay for the additional costs.
Answer: B
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According to classical growth theory, when real GDP per person ________, the population grows
A) is less than the subsistence real income B) is less than capital per hour of labor C) is constant D) exceeds the subsistence real income E) exceeds capital per hour of labor
The full-employment rate of unemployment is zero
Indicate whether the statement is true or false
An easier monetary policy ________ the user cost of capital, which ________ net investment
A) raises, raises B) raises, lowers C) lowers, raises D) lowers, lowers
Assuming a simple Keynesian multiplier, and given an increase in planned investment of $100 billion, the effect on total output will be greater than $100 billion only if the
A) MPS is greater than zero. B) MPC is zero. C) MPS is less than zero. D) MPC is greater than one.