In Figure 28.1, if the rate of output is 320 units,
A. There is government failure.
B. Social costs exceed private costs at this rate of output.
C. Pollution costs are internalized.
D. Output is less than the socially optimal level.
Answer: B
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An increase in government expenditure can ________ potential GDP and an increase in taxes can ________ potential GDP
A) increase; never change B) increase; increase C) decrease; decrease D) never change; never change E) increase; decrease
In recent years, economists have come to believe that full employment in the U.S. economy occurs at an unemployment rate between:
a. 1.0 and 2.0 percent. b. 2.5 and 3.5 percent. c. 4.5 and 5.5 percent. d. 6.5 and 7.5 percent.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.
An increase in a country's budget deficit
a. increases net capital outflow, so the demand for its currency in the market for foreign-currency exchange shifts right. b. increases net capital outflow, so the supply of its currency in the market for foreign-currency exchange shifts right. c. decreases net capital outflow, so the demand for its currency in the market for foreign-currency exchange shifts left. d. decreases net capital outflow, so the supply of its currency in the market for foreign-currency exchange shifts left.