An increase in aggregate demand with no adjustment in monetary policy will result in:
A. no change in inflation.
B. no change in potential output but higher inflation.
C. an increase in potential output and higher inflation.
D. a decrease in potential output and higher inflation.
Answer: B
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Externalities can be internalized through voluntary agreements as long as
A. transaction costs are low relative to expected benefits. B. transaction costs are high relative to expected benefits. C. the agreement is a short-run agreement. D. the agreement is a long-run agreement.
Suppose a company that produces mouthwash branches out into producing toothpaste. If this expansion reduces the average cost per unit, the company must
a. benefit from vertical integration b. benefit from horizontal integration c. experience economies of scale d. experience economies of scope e. have no transaction costs
Economic growth is:
A. a result of having more natural resources, land or capital. B. an increase in our economy's potential output. C. represented by the long-run aggregate supply curve shifting to the right. D. All of these are true.
The WTO seems at times to be interfering in domestic policy since
A) the line between domestic policies and de factor protectionism is often fuzzy. B) it is a supra-national organization with the power to overturn governments. C) it determines which nations may trade what with whom. D) it punishes naughty nations. E) it exempts the U.S. and other powerful member nations from many of its edicts.