According to real business cycle models
A) the economy is normally operating below the natural rate of unemployment.
B) unexpected changes in monetary policy are the major source of fluctuations in real GDP.
C) the economy is normally at potential GDP.
D) the long-run Phillips curve is negatively sloped.
C
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The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the quantity of milk sold is
A) greater than the efficient level of output. B) less than the efficient level of output. C) 100 million gallons greater than the efficient level of output. D) the efficient level of output.
In general, a fine on selling a product leads to the
A) supply curve shifting rightward. B) supply curve shifting leftward. C) demand curve shifting rightward. D) demand curve shifting leftward.