Which of the following situations probably would not yield a negative externality?
A. a rock concert in the quad next to the library
B. one person who is smoking cigarettes in a closed room where several other people are present
C. a tutor quietly instructs a student in economics as a bystander willingly listens in without the tutor knowing it
D. mowing your lawn early on a Saturday morning when you live in a densely populated neighborhood
E. All of the above situations would yield negative externalities.
Answer: C
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The economy has no international trade and no income taxes. In the short run, if government purchases were to decrease by $25 billion and the marginal propensity to consume was equal to 0.66 then real GDP would decrease by
A) $16.5 billion. B) $37.8 billion. C) $8.25 billion. D) $75 billion.
If the marginal propensity to save (MPS) is 0.1, the spending multiplier will be
A. 1.1. B. 10. C. 0.9. D. 0.1.
Which of the following characteristics would describe a product with an inelastic demand?
A. The good is considered a necessity and many substitutes for the product exist. B. The good is considered a necessity and few substitutes for the product exist. C. The good is considered a luxury and many substitutes for the product exist. D. The good is considered a luxury and few substitutes for the product exist.
Monetary policy includes changing the level of household taxes.
Answer the following statement true (T) or false (F)