Suppose a tax equal to the value of the external cost of producing car batteries is imposed by government on all car battery manufacturers. All of the following will result from the tax except
A) an increase in demand for car batteries.
B) a decrease in the market supply of car batteries.
C) an increase in the equilibrium price of car batteries.
D) a decrease in the equilibrium quantity of car batteries produced and consumed.
A
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Fiscal policy has a greater impact in a closed economy than it does in an open economy
Indicate whether the statement is true or false
The ways to address agency costs include
a. gathering information about the agent's characteristics before hiring b. gathering information about the agent's actions once hired c. incentivizing agents to work on behalf of principals d. all of the above
If short-term and long-term interest rates are currently equal and the Fed contracts the money supply, the yield curve would be expected to:
A. become downward sloping. B. become vertical. C. be unaffected. D. become upward sloping.
The crowding-out effect refers to the tendency of expansionary fiscal policy to
A. cause firms to produce above their full capacity. B. cause decreases in planned expenditures in the private sector. C. replace low-skilled labor with higher-skilled labor. D. cause households to save less.