A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called
A) a public good.
B) a merit good.
C) an externality.
D) the free-rider problem.
C
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You are an economic advisor to the president. You are asked to recommend a policy to promote long-term economic growth in the economy. Which of the following policies would you choose?
A) a reduction in sales taxes B) a reduction in taxes on luxury yachts C) an investment tax credit D) all of the above
Type I errors are
a. False negatives b. False positives c. True negatives d. True positives
As the market price of a good rises, businesses will respond by producing more of that good because
A. marginal revenue exceeds marginal cost after the price increase. B. the rising price causes marginal cost to fall. C. laws and regulations require them to do so. D. marginal cost exceeds marginal revenue after the price increase.
If most people expect the inflation rate will increase, the:
A. short-run aggregate supply curve would shift to the left. B. aggregate demand curve would shift right. C. long-run aggregate supply curve would shift right. D. short-run aggregate supply curve would shift to the right.