Which of the following statements is true?
A) Testing with data is essential to develop a good theory.
B) Knowledge of economics complicates decision making.
C) Cost-benefit analysis can be applied only to limited economic decisions.
D) Economics is more of a theoretical subject with limited applications in the real world.
A
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Because of the multiplier effect, a $10 million increase in government expenditure will cause the economy's equilibrium level of real GDP to increase by less than $10 million
a. True b. False Indicate whether the statement is true or false
Refer to the supply and demand graph below. S1 and D1 represent the current market supply and demand, respectively. S2 and D2 represent the socially optimal supply and demand. One way that the government could shift supply to its socially optimal level
is to:
A. Tax the sellers
B. Subsidize the buyers
C. Produce the product
D. Regulate the production of the good