If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created, their demand curve would shift:
A. up and they would consume more.
B. down and they would consume less.
C. down and they would consume more.
D. up and they would consume less.
B. down and they would consume less.
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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
Nations that borrow from abroad to support current investment will
A) always sacrifice future consumption. B) sacrifice future consumption only if the investments are profitable. C) always be better off in the future. D) be better off in the future if the investments are profitable.
Today, the dollar is worth 1.15 euros. Due to changes in economic conditions, people expect that the dollar will be worth 1.20 euros in the next month. This belief
A) increases the demand for dollars. B) decreases the demand for dollars. C) increases the demand for euros. D) increases the value of exports to Europe.
The expected effects of fiscal contraction are
a. higher real interest rates. b. exchange rate depreciation. c. increased trade deficit. d. All of the above are correct.