In the case of an external benefit generated by an activity, such as education, a private subsidy for that activity can achieve an efficient outcome
Indicate whether the statement is true or false
TRUE
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Suppose good X has a negative income elasticity of demand. This implies that good X is
a. a normal good. b. a necessity. c. an inferior good. d. a luxury.
For purposes of calculating GDP using the expenditure approach, which of the following payments is NOT included in the government spending component?
A. The wages paid by a state government to the workers in its welfare department
B. Social Security pensions
C. The wages paid by a local government to its road crew
D. The federal government's purchase of a submarine from a shipbuilder
Which of the following is graphed as a horizontal line across levels of real GDP in the aggregate expenditures model?
A. the saving schedule B. the investment schedule C. the investment demand curve D. the consumption schedule
A fiscal policy action to close a recessionary gap is to:
A. increase taxes. B. increase the marginal propensity to consume. C. decrease transfer payments. D. increase government purchases.