The economist that originated the idea that government can correct externalities through taxes and subsidization is:
A. John Nash.
B. Arthur Cecil Pigou.
C. Ronald Coase.
D. Theodore Groves.
B. Arthur Cecil Pigou.
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The relationship between money growth rates and inflation between 1982 and 2010 helps explain why, by the 1990s, most economists had
a. adopted the monetarist explanation of inflation. b. adopted a rules-only approach to monetary policy. c. become more convinced of the monetary causes of inflation. d. abandoned monetarism as the primary explanation of inflation.
To be economically successful, the entrepreneur must
a. combine resources in a manner that increases their value. b. produce a good that consumers value less than the resources used to produce it. c. use only personal financial capital to avoid the interest payments that would have to be paid if the money is borrowed from the bank. d. transform or rearrange resources to maximize the entrepreneur's cost of production.
A Big Mac costs $3 in the United States and 50 pesos in Mexico. The purchasing power parity theory would predict that the exchange rate in the long run is
A. $1 = 6 pesos. B. 1 peso = $1.50. C. $1 = 16.67 pesos. D. $1 = 0.06 pesos.
Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A B. Falling; A; C C. Falling; B: C D. Rising; A; C