If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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An example of a negative externality is: a. the benefit you receive when your neighbor installs a smoke detector
b. the reduction in profits for your company that occurs when there is a decrease in consumer demand for the product you manufacture. c. the sleep you lose when your neighbor throws a loud party next door that keeps you awake. d. the change in the property values of your neighbors' homes when you paint your house and landscape your front yard
Which of the following will cause the U.S. money supply to expand?
a. a commercial bank uses excess reserves to extend a loan to a customer b. a commercial bank purchases U.S. securities from the Fed as an investment c. an increase in reserve requirements d. an increase in the discount rate