Refer to the following graph. An increase in aggregate demand when the economy is already at full employment is reflected as a rightward shift of the aggregate demand curve from
a. aggregate demand would have to increase.
b. aggregate demand would have to decrease.
c. aggregate supply would have to increase.
d. aggregate supply would have to decrease.
c. aggregate supply would have to increase.
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All else held equal, economists would prefer a tariff over an import quota because
A. domestic producers can charge higher prices with a tariff than with an import quota. B. compared with an import quota, a tariff enables consumers to pay lower prices. C. a tariff enables the government to collect revenue, whereas an import quota does not. D. a tariff allows the market to adjust import quantities if domestic supply, domestic demand, or world price changes.
The principal concept behind comparative advantage is that a nation should
A. concentrate production on those products for which it has the lowest domestic opportunity cost. B. maximize its volume of trade with other nations. C. strive to be self-sufficient in the production of essential goods and services. D. use tariffs and quotas to protect the production of vital products for the nation.
If a tax is placed on perfectly competitive firms that impose external costs on society, the firm's marginal cost curve will shift ________ and the industry supply curve will shift to the ________.
A. down; left B. up; left C. down; right D. up; right
Instruments that can be used to control overuse of a common resource include
A. privatizing the resource. B. taxes. C. standards. D. all of the above