From an initial long-run macroeconomic equilibrium, if the Federal Reserve anticipated that next year aggregate demand would grow significantly faster than long-run aggregate supply, then the Federal Reserve would most likely
A) increase income tax rates.
B) decrease income tax rates.
C) increase interest rates.
D) decrease interest rates.
Answer: C
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The Pacific Pulp Company plans to clearcut 100 acres of land to produce paper pulp which would earn the firm $50,000 in profits. One hundred nearby homeowners realize that this would reduce the value of each of their properties by $1,000. These 100 homeowners
a. face a logistical problem of getting together to offer a bribe to Pacific Pulp. b. would not benefit from offering any side payment to Pacific Pulp not to clearcut. c. have no legal option except to suffer the damages to their property values. d. can costlessly organize to offer Pacific Pulp a side payment not to clearcut.
When the government sets a price floor which is below the equilibrium price
A. a price ceiling will follow. B. a shortage will develop. C. a surplus will develop. D. the equilibrium price will be maintained.
The two broad fields that make up the subject of economics are:
A. microeconomics and macroeconomics. B. personal investments and business investments. C. fiscal policy and monetary policy. D. imports and exports.
An economic policy that is based on a flawed theory can, at times, provide a desired outcome
a. True b. False Indicate whether the statement is true or false