Markets are forums where buyers and sellers conduct transactions
Indicate whether the statement is true or false
TRUE
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When producers do not have to pay the full cost of producing a product, they tend to
A. underproduce the product because of a positive externality. B. underproduce the product because of a negative externality. C. overproduce the product because of a positive externality. D. overproduce the product because of a negative externality.
If the actual inflation rate is less than the expected inflation rate, the actual real interest rate will be ________ than the expected real interest rate. When this happens, ________ will lose and ________ will gain
A) less; borrowers; lenders B) less; lenders; borrowers C) greater; borrowers; lenders D) greater; lenders; borrowers
Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand is
A) zero. B) positive. C) negative. D) either positive or negative.
A lump-sum tax:
A. charges the same amount to each taxpayer, regardless of economic behavior or circumstances. B. refers to annual, rather than quarterly tax payments throughout the year. C. is tied to spending habits, not income levels. D. is tied to income levels, not spending habits.