Whether an externality is positive or negative, it is always
A. evaluated by the impact on the third party.
B. evaluated by the government.
C. judged by the profitability of the firm producing the product.
D. evaluated by the Supreme Court of the United States.
Answer: A
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The term externalities refers to
A) consequences of action not taken into account in making decisions. B) social interactions associated with urban-industrial economies. C) the superficial consequences of decisions. D) the visible consequences of decisions.
The quantity theory of inflation indicates that the inflation rate equals
A) the growth rate of the money supply minus the growth rate of aggregate output. B) the level of the money supply minus the level of aggregate output. C) the growth rate of the money supply plus the growth rate of aggregate output. D) the level of the money supply plus the level of aggregate output.
If the absolute price elasticity of demand is 0.2, a 10 percent increase in the price will cause
A) the quantity demanded to decrease by 2 percent. B) the quantity demanded to decrease by 20 percent. C) the quantity demanded to decrease by 5 percent. D) the quantity demanded to decrease by 0.2 percent.
You can determine the lag lengths in a VAR
A) by using confidence intervals. B) by using critical values from the standard normal table. C) by using either F-tests or information criteria. D) with the help from economic theory and institutional knowledge.