If living standards in a country, as measured by output per person, increase, then total output must have:
A. decreased more rapidly than population decreased.
B. increased at the same rate that population increased.
C. increased more slowly than population increased.
D. increased more rapidly than population increased.
Answer: D
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A positive externality exists and government wants to impose a subsidy in order to bring about an efficient outcome. To accomplish its objective, government must set the subsidy equal to marginal
A. private cost. B. social benefit. C. external cost. D. social cost. E. external benefit.
The demand for a specific brand of corn flakes cereal is likely to be:
A. very price elastic, because there are many close substitutes available. B. less price elastic, because there are many close substitutes available. C. very price elastic, because that specific brand is a unique product. D. less price elastic, because the specific brand is a unique product.
The natural rate hypothesis argues that the economy will:
a. self-correct to the natural rate of inflation. b. require expansionary fiscal policy to reach the natural rate of unemployment. c. self-correct to the natural rate of unemployment. d. require expansionary monetary policy to reach the natural rate of unemployment.
Which of the following would cause prices and real GDP to rise in the short run?
a. an increase in the expected price level b. an increase in the money supply c. a decrease in the capital stock d. an increase in taxes.