Real business cycle theory suggests that changes in
A. technology and resources affect productivity, and thus the long-run growth of aggregate supply.
B. monetary policy is the single most important cause of macroeconomic instability.
C. the velocity of money is gradual and predictable and thus able to accommodate the long-run changes in nominal GDP.
D. investment spending will have a direct and significant effect on aggregate demand.
Answer: A
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In the figure above, if a pollution tax is imposed that is equal to the marginal external cost of pollution, then at the equilibrium, marginal social cost would ________ marginal benefit, and the quantity of chemical produced would be ________
A) exceed; above the efficient quantity B) exceed; below the efficient quantity C) be below; above the efficient quantity D) be below; below the efficient quantity E) equal; efficient
The majority of economists favor open capital flows
Indicate whether the statement is true or false
In a well-functioning financial market, the only way to get consistently higher returns over the long run is to take more risks. This is known as the
A. risk-return principle. B. fixed income principle. C. price appreciation principle. D. diversification principle.
Other things equal, an increase in the Z factors shifts
A. the AS curve to the left. B. the AD curve to the right. C. the AS curve to the right. D. the AD curve to the left.