If people took external costs like pollution into consideration, they would on net:
A. not change their behavior to consume more or less of the goods causing externalities.
B. consume less of the goods causing these externalities.
C. consume a socially non-optimal amount of the goods causing the externalities.
D. consume more of the goods causing these externalities.
Answer: B
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Classical macroeconomic theorists believed that the economy would recover on its own from an economic downturn because:
A. falling wages would lead prices to fall, which, in turn, would spur consumer spending. B. falling wages would lead consumers to spend less and save more. C. rising wages would lead prices to rise, which, in turn, would lead consumers to spend less. D. higher prices would lead wages to rise, which, in turn, would spur consumer spending.
Most economists believe that classical theory describes the world in the short run but not in the long run
a. True b. False Indicate whether the statement is true or false
Suppose the economy is currently experiencing 6% inflation per year. If the Fed wants to reduce inflation to 2% and the sacrifice ratio is 5, then how much annual output must be sacrificed in the transition?
a. 5% b. 10% c. 15% d. 20%
When looking at a monopolist's level of output, you can expect to find
A. average revenue greater than price. B. price greater than marginal cost. C. marginal cost greater than marginal revenue. D. marginal revenue greater than price.