When the government taxes a firm that generates external costs, the firm will produce
A. fewer units of output than before the tax was imposed in order to continue maximizing profits.
B. more units of output than before the tax was imposed in order to continue maximizing profits.
C. the same number of units of output as before the tax was imposed to continue maximizing profits.
D. either more or fewer units of output than before the tax was imposed depending upon what happens to the profit-maximizing level of output.
Answer: A
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If nominal GDP increases by 5 percent a year and the GDP price index rises by 2 percent a year, then real GDP increases by ________
A. 7 percent a year B. 3 percent a year C. 2.5 percent a year D. 10 percent a year
If the fiscal year begins without a budget and Congress fails to pass a continuing resolution, then:
a. the federal government shuts down. b. the interest rate paid on the national debt automatically increases. c. federal agencies operate on the basis of the previous year's budget. d. the president has the right to raise the debt ceiling.
If an economy is operating on its production possibilities frontier (PPF), are there any unemployed resources in the economy?
A) Yes, because if there weren't any unemployed resources the economy would be producing beyond its PPF. B) No, because if there were any unemployed resources the economy would be producing below its PPF. C) It depends on whether the economy's PPF is a concave (downward-sloping) curve or a straight line. D) Yes, because there are always some natural resources that are unemployed. E) The answer is "yes," but not for any of the reasons specified in answers a through d.
Special interest groups are usually
A) well informed on all political issues. B) well informed on all economic issues. C) well informed on issues of interest to them. D) not well informed on any issues, but appear to be.