The assumption that labor markets clear makes it very easy for the classical model to explain recessions
a. True
b. False
B
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The major advantage of the corporation is
A. limited liability for owners. B. greater profit incentive than the other forms of business organization. C. lower taxes for owners, who are taxed only once. D. ability of owners to have hands-on management of the firm.
Taxes are injections into the circular flow of income and expenditure model
a. True b. False Indicate whether the statement is true or false
Sometimes the government deals with externalities by creating laws to regulate behavior instead of using taxes to correct the market failure. So, requiring auto manufacturers to install a device called a catalytic converter which removes some toxins from exhaust may be preferable to a gas tax that reduces driving levels. This route is often preferred because:
a. c and e. b. it requires less technological development. c. it doesn't penalize drivers of clean cars. d. only car drivers pay for the externality. e. the cost of the externality is unknown.
There is a negative relationship between the price level and which components of GDP?
A. C, I, and G B. I, G, and NX C. C, G, and NX D. C, I, and NX