Correcting a market with an externality through taxation creates ___________ total surplus compared to correcting it through a quota.
A. more
B. less
C. the same
D. Any of these statements could be true depending on whether the tax is imposed on the buyer or seller.
A. more
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Money serves as a unit of account, which means:
a. it acts as an intermediary between the buyer and the seller. b. it will still hold its value. c. it is the ruler by which other values are measured. d. it must also be acceptable to make purchases today that will be paid in the future.
A computer company is considering lowering the price of its laptop computer to promote sales. However, it worries that this will reduce desktop computer sales. It finds the cross product of demand to be 1.5. Are its concerns legitimate? Explain
Please provide the best answer for the statement.
A classical IS-LM model of the world economy can be used to show that in a flexible exchange-rate system, a temporary increase in government purchases will cause
A. output and the real interest rate to rise, which increases net exports but has an ambiguous effect on the real exchange rate. B. output to rise and the real interest rate to fall, which reduces net exports and causes the exchange rate to depreciate. C. the real interest rate to fall, which causes the exchange rate to rise, which reduces net exports. D. output and the real interest rate to rise, which reduces net exports but has an ambiguous effect on the real exchange rate.
Reasons that the recession of 2008-2009 did not become a depression include:
i. The Fed bailed out troubled financial institutions. ii. The government aggressively balanced its budget. iii. The government increased its expenditures, which increased aggregate demand. A) i only B) ii only C) iii only D) i and iii E) i and ii