The term "shock":
A.
Always refers to an unexpectedly bad event
B.
Always refers to an increase in inflation
C.
Does not tell us whether what has happened is unexpectedly bad or unexpectedly good
D.
Always refers to a decrease in real GDP and an increase in unemployment
C.
Does not tell us whether what has happened is unexpectedly bad or unexpectedly good
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A major principle of economics is that people respond to incentives
Indicate whether the statement is true or false
Consider a worker who dislikes working end enjoys consuming a composite good. With labor hours on the horizontal and the composite consumption good on the vertical axis, which of the following statements are true.
A. If the worker's tastes are convex, the slope of indifference curves increases as we move to the right in the graph. B. The worker becomes better off as we move to the northwest in the graph. C. A tax on wage income does not change this worker's indifference map. D. All of the above. E. None of the above.
Generating electricity creates air pollution. This industry, if left unregulated, will produce
A) more than the efficient level of output. B) the efficient level of output. C) less than the efficient level of output. D) sometimes more and sometimes less than the efficient level of output.
A consequence of a negative externality is that social costs __________ private costs, and the efficient level of output __________
A) equal; does not require any type of government intervention B) are less than; requires the government to create a subsidy C) are greater than; requires the government to impose a tax D) are greater than; requires the government to create a subsidy E) are less than; requires the government to impose a tax