If demand is downward sloping and there is tax on the good, Consumer surplus equals
a. The area between the demand curve and the price, up to the equilibrium quantity.
b. Total surplus minus producer surplus.
c. Total surplus minus producer surplus and government tax revenue.
d. Total surplus minus producer surplus, government tax revenue, and dead-weight loss.
d. Total surplus minus producer surplus, government tax revenue, and dead-weight loss.
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Suppose the equilibrium real federal funds rate is 2 percent, the target rate of inflation is 2 percent, the current inflation rate is 4 percent, and real GDP is 2 percent above potential real GDP
If the weights for the inflation gap and the output gap are both 1/2, then according to the Taylor rule the federal funds target rate equals A) 4 percent. B) 6 percent. C) 8 percent. D) 10 percent.
The Coase theorem
A. shows that under certain conditions the market can internalize externalities. B. states that economic units should specialize in the production of those goods in which they have a comparative advantage. C. asserts that the firm should produce that output at which marginal cost is equal to marginal revenue. D. holds that the firm should produce that output at which marginal factor cost is equal to marginal revenue product.
The slope of the total production curve becomes:
A. steeper when marginal product increases, typically at low levels of input. B. flatter when marginal product increases, typically at high levels of input. C. steeper when marginal product decreases, typically at high levels of input. D. flatter when marginal product decreases, typically at low levels of input.
Equity and property price bubbles are commonly associated with periods when:
A. financial asset prices reflect the book value of companies. B. financial asset prices are well above what seems to be a reasonable present value estimate of earnings. C. the earnings that companies report are overstated. D. financial assets are undervalued.