When there are no externalities
A) social costs are greater than private costs.
B) social costs are less than private costs.
C) private costs are greater than social costs.
D) private costs equal social costs.
D
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An inflationary output gap is defined to be when the current level of output is:
A. below full employment GDP. B. above full employment GDP. C. equivalent to full employment GDP. D. high enough to cause an unexpected amount of inflation.
The insider-outsider model argues that:
a. a firm depends on its insiders to grease the wheels of the organization, to be familiar with routine procedures, to train new employees, and so on. b. employers will try to keep wages from falling when the economy is weak or the business is having trouble, and employees will not expect huge salary increases when the economy or the business is strong. c. the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. d. if an employer increases the wage for all workers, then the best workers with the best employment alternatives at other firms are more likely to leave, while the least attractive workers, with fewer employment alternatives, are more likely to stay.
The velocity of circulation is defined as the
A) average number of times in a year that each dollar is used to buy goods and services. B) price level obtained when the money market is at its equilibrium. C) quantity of money demanded at equilibrium. D) speed with which changes in the interest rate spread throughout the economy. E) quantity of money supplied by the Fed.
The gravity model suggests that over time
A) trade between neighboring countries will increase. B) trade between all countries will increase. C) world trade will eventually be swallowed by a black hole. D) trade between Earth and other planets will become important. E) the value of trade between two countries will be proportional to the product of the two countries' GDP.