The market mechanism provides a financial incentive for firms to minimize the pollution they create.

The steepness of the aggregate supply curve depends on the:

a. rate of inflation in the economy. b. change in relative prices of commodities. c. substitutability of the inputs used in producing various goods and services. d. ability of the producers to respond to price-level changes in the short run. e. the market rate of interest.

If the public has rational expectations,

A) the only effective policy would be one that is implemented by surprise. B) if the public incorrectly anticipates a given policy, there could be adverse results. C) if policymakers do not do what they say they are going to do, then there could be adverse results. D) a, b, and c E) none of the above