Refer to the figure below. This graph describes a good that:
A. generates negative externalities.
B. the government should tax.
C. generates positive externalities.
D. should be banned.
Answer: A
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Covered interest parity refers to the situation in which:
a. interest rates are the same in both currencies. b. spot and forward rates are the same in both currencies. c. the forward rate between the two currencies is equal to the ratio of their returns times the spot rate between the two currencies. d. there is an opportunity for arbitrage whenever prices are sluggish and sticky.
The short-run aggregate supply curve slopes: a. downward because firms can sell more, and hence, will produce more when prices are lower
b. downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more. c. upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time. d. upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit.