The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
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To make a market efficient in the presence of a negative externality, a tax could be imposed that is equal to the marginal
a. social cost b. private benefit c. social cost minus marginal private cost d. social cost minus marginal private benefit e. private benefit minus marginal social benefit
Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied
a. True b. False Indicate whether the statement is true or false
One major tax loophole intended to help state & local governments raise funds is:
a. fiscal federalism b. tax exempt municipal bond interest c. tax deductible mortgage interest d. tax credits for solar panels
Which statement is true?
A. The Federal Open Market Committee has very little power. B. The Federal Reserve rarely raises or lowers the discount rate. C. Our money supply grows at a rate of between three and four percent a year. D. The Federal Reserve rarely changes the reserve requirements.