If a good causes a negative externality, regulation might take the form of a
A. tax.
B. requirement for consumption.
C. subsidy.
D. price ceiling.
Answer: A
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When the unemployment rate is less than the natural unemployment rate, real GDP is ________ potential GDP
A) greater than B) unrelated to C) not comparable to D) equal to E) less than
The formula for determining a real variable is real variable =
a. (nominal variable ? 100) ? CPI b. (nominal variable ? CPI) ? 100 c. (nominal variable ? price index) ? 100 d. (nominal variable ? price index) + 100 e. (nominal variable ? price index) ? 100
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). b. The GDP Price Index and net nonreserve-related international borrowing/lending remain the same. c. The GDP Price Index falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). d. The GDP Price Index rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). e. The GDP Price Index rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
If the government intervenes in the market, while the market meets the efficiency conditions, then the government:
A. promotes more efficiency. B. causes inefficiency. C. reduces the consumer surplus only. D. reduces the producer surplus only.