The Coase Theorem states that:
a. bargaining between producers and consumers leads to an efficient outcome when costs are low.
b. bargaining between producers and consumers leads to an efficient outcome when costs are high.
c. property rights should be assigned to the producers causing the externality
d. property rights should be divided between the consumers affected by the externality.
a
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The equilibrium output level in the country of Plutonia is $40 billion, while its potential output is $60 billion. Suppose the central bank of the country implements an expansionary monetary policy. This is likely to lead to _____
a. an expansionary gap b. a liquidity trap c. disinflation d. inflation
In general, supply curves with an elasticity of supply between 0 and 1 are referred to as:
A. inelastic. B. elastic. C. perfectly elastic. D. perfectly inelastic.
If government spending increases, which causes producers to hire more workers, and as a result households have more income to spend, which causes aggregate demand to increase even more, this is known as the:
A. Magnifying process. B. Multiplier process. C. Saving effect. D. Fiscal effect.
The AS/AD model with sticky prices predicts that, in the long run, a reduction of the money supply results in:
a. lower prices and lower output. b. no change in prices and lower output. c. lower prices and no change in output. d. no change in prices or output.