Recall the Application about the role of megacities in economic growth to answer the following question(s).According to the Application, what is the term economists use to refer to the extra productivity that occur in larger cities?
A. agglomeration economies
B. aggregation economies
C. economies of scale
D. comparative advantage
Answer: A
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If the real interest rate is equal to the nominal interest rate in an economy:
A) inflation must be negative in the economy. B) inflation must be zero in the economy. C) inflation must be positive in the economy. D) the nominal interest rate must be zero.
Everything else held constant, a decrease in the required reserve ratio on checkable deposits will mean
A) a decrease in the money supply. B) an increase in the money supply. C) a decrease in checkable deposits. D) an increase in discount loans.
Which of the following is a leading business cycle indicator?
a. The unemployment rate. b. The volume of outstanding commercial loans. c. New building permits. d. Personal income.
Suppose Johnson's Rubber Factory belches black smoke into the air over the city of Bellowsville. If the city of Bellowsville attempts to internalize the external costs associated with the production of rubber with a pollution tax, we can expect:
A. the price of rubber not to change. B. the price of rubber to increase. C. the quantity of rubber demanded to increase. D. no change in the quantity of rubber demanded.