If a factory has a short-run capacity constraint (e.g., an auto plant can only produce 800 cars per day at maximum capacity), the marginal cost of production becomes ________ at the capacity constraint
A) infinite
B) zero
C) highly elastic
D) less than the average variable cost
A
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Only when budget deficits are financed by money creation does the increased government spending lead to ________ in the ________
A) a decrease; monetary base B) an increase; monetary base C) a decrease; money multiplier D) an increase; money multiplier
Firms that emit toxins into the air:
a. underproduce because the private cost of production exceeds the social cost. b. overproduce because the social cost of production exceeds the private cost. c. produce the same as nonpolluting firms. d. produce at the socially optimal amount.
The government's benefit from a tax can be measured by
a. consumer surplus. b. producer surplus. c. tax revenue. d. All of the above are correct.
The interest-rate effect
a. depends on the idea that increases in interest rates increase the quantity of money demanded. b. depends on the idea that increases in interest rates increase the quantity of money supplied. c. is the most important reason, in the case of the United States, for the downward slope of the aggregate-demand curve. d. is the least important reason, in the case of the United States, for the downward slope of the aggregate-demand curve.