If real GDP exceeded potential real GDP and inflation was increasing, which of the following would be an appropriate fiscal policy?
A) an increase in oil prices
B) an increase in taxes
C) an increase in government spending
D) a decrease in the money supply and an increase in the interest rate
B
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If negative externalities are present in a market, ________
A) the price charged in the market is higher than the socially optimal price B) the quantity supplied in the market is larger than the socially optimal level C) the marginal social cost of production is lower than the marginal private cost D) the average cost of production exceeds the marginal cost of production at all output levels
International trade is most likely to occur whenever
a. one of the trading nations is self-sufficient b. all of the trading nations are self-sufficient c. one of the trading nations gains from trade d. each of the trading nations gains from trade e. labor is cheaper abroad