Using Taylor rule, the federal funds rate is increased or decreased according to what is happening to both real GDP and inflation

Suppose that the Anytown city government asks private citizens to donate money to support the town's annual holiday lighting display. Assuming that the citizens of Anytown enjoy the lighting display, the request for donations suggests that:

A. the display creates negative externalities. B. government should tax the producers of holiday lighting. C. resources are currently overallocated to the provision of holiday lighting in Anytown. D. resources are currently underallocated to the provision of holiday lighting in Anytown.

Figure 1.8 suggests that

A. The law of increasing opportunity cost does not apply. B. The relationship between study time and grade point average is constant. C. The relationship between study time and grade point average is first linear, then nonlinear. D. Resources can be perfectly adapted between study time and grade point average.