Suppose the production of a good results in positive externalities. If output occurs at the intersection of the supply curve and the marginal social benefits curve, then
A. the socially optimal level of output will be produced.
B. society will incur a net social cost.
C. society will want less produced, and producers will be willing to satisfy that desire.
D. there is market failure.
Answer: A
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Unlike monetary policy, fiscal policy does not experience policy lags
Indicate whether the statement is true or false
If you were the Chairman of the Fed and faced inflation, you would most likely
a. increase commercial bank reserves by raising the discount rate b. increase commercial bank reserves by buying government securities c. decrease commercial bank reserves by lowering the discount rate d. decrease commercial bank reserves by selling government securities e. decrease commercial bank reserves by lowering the legal reserve requirement
At the Federal Reserve,
a. the nation's monetary and fiscal policies are made by the Federal Open Market Committee, which meets about every six weeks. b. the nation's monetary and fiscal policies are made by the Federal Open Market Committee, which meets twice a year. c. the nation's monetary policy is made by the Federal Open Market Committee, which meets about every six weeks. d. the nation's monetary policy is made by the Federal Open Market Committee, which meets twice a year.
If the U.S. dollar appreciates in value relative to foreign currencies, then this will:
A. increase aggregate demand and aggregate supply. B. increase aggregate demand and decrease aggregate supply. C. decrease aggregate demand and aggregate supply. D. decrease aggregate demand and increase aggregate supply.