In a natural monopoly situation
A) there are large economies of scale relative to demand.
B) the firm has an upward sloping average cost curve.
C) producers try to differentiate their product with advertising.
D) there is no need for government regulation.
A
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Who is affected when a Pigouvian subsidy is imposed on a market with a positive externality?
A. Producers B. Consumers C. Those affected by the externality D. All of these groups would be affected.
According to convergence theory, countries that start out poor should initially grow:
A. faster than ones that start out rich, but will eventually slow to the same growth rate. B. slower than ones that start out rich, but will eventually grow to the same growth rate. C. faster than ones that start out rich, and will eventually surpass their level of income. D. slower than ones that start out rich, and therefore will never reach a similar growth rate.
According to the Taylor Rule, if the inflation rate is 3 percent and the GDP gap is 2 percent, what does the federal funds rate target equal?
A) 8.5 percent B) 5.5 percent C) 3.5 percent D) 6.5 percent
Which of the following is most likely to increase long-run aggregate supply in an economy?
a. A decrease in the size of the labor force b. A deterioration in the quality of the labor force c. A reduction in the cost of using computers d. An increase in the price level e. An increase in aggregate demand