Price will increase and output will decrease once government makes a firm
A. internalize a positive externality.
B. externalize a positive externality.
C. internalize a negative externality.
D. externalize a negative externality.
Answer: C
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The tax multiplier is smaller in absolute value than the government purchases multiplier because some portion of the
A) decrease in taxes will be saved by households and not spent, and some portion will be spent on imported goods. B) increase in government purchases will be saved by households and not spent, and some portion will be spent on imported goods. C) decrease in taxes will be saved by households and not spent, and some portion will be spent on consumer durable goods. D) increase in government purchases will be saved by households and not spent, and some portion will be spent on consumer durable goods.
The Fed increases the money supply by buying securities for $300 million. The impact of this increase, in the long-run, would be to
A. raise the average price level and increase the level of real GDP. B. raise the average price level, but real GDP (output) would stay the same. C. raise the real supply of loanable funds, lower the interest rate, and increase the demand for output. D. raise the real supply and demand for loanable funds with an increase in the interest rate.
In 1973 the OPEC countries
A. lowered the price of oil by 50%. B. raised the price of oil by 50%. C. doubled the price of oil. D. quadrupled the price of oil.
"The unemployment rate is five percent" is an example of a normative statement
Indicate whether the statement is true or false