Public goods are goods that we all agree are useful and therefore are all willing to pay for. This implies that there is no efficiency problem in the production of public goods.

The European Union is seen as a less than optimal currency area because

A) of a lack of labor mobility and fiscal integration. B) of a lack of fiscal integration and capital mobility. C) of disagreements over fiscal policy and trade restrictions. D) of the national identity lost with the euro.

Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.

A. lower; potential B. higher; higher C. higher; potential D. lower; higher