In the US, an increase in which of the following will cause an increase in US imports?
I. Per capita real income
II. Price Level
III. Real interest rates
IV. Tariffs
a. I and II only
b. I and III only
c. I and IV only
d. I, II, and III only
e. II, III, and IV only
Ans: d. I, II, and III only
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When the social costs exceed the private costs, economists state that there is
A) a positive externality. B) an underproduction of output. C) a negative externality. D) social appreciation of resources.
Is increased capital spending the only way for an economy to expand its production possibilities frontier?
a. No, an economy can also expand by invention and innovation. b. No, an economy can also grow by investment instead of capital spending. c. Yes, more capital is the only way to expand its production possibilities frontier. d. Yes, although more capital clearly has a high opportunity cost. e. Yes, because capital is the only constraining resource that limits growth.