Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes lowered. At the same time, Senator B succeeds in getting major restrictions on logging enacted. In the short run
a) real GDP will fall and the price level might rise, fall, or stay the same.
b) the price level will fall, and real GDP might rise, fall, or stay the same.
c) real GDP will rise and the price level might rise, fall, or stay the same.
d) the price level will rise, and real GDP might rise, fall, or stay the same.
Ans: d) the price level will rise, and real GDP might rise, fall, or stay the same.
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If a corporation retains all its profits and distributes none of the profit to owners, how can owners benefit?
A) If the retained earnings are expected to create future profits, the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold. B) Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments. C) Owners will benefit by changing the board of directors. D) Owners will only benefit if some profits are paid out in the form of dividends.
Refer to the above figures. An external benefit exists. This will lead to a(n)
A) underproduction equal to Q1 minus Q2. B) overproduction equal to Q4 minus Q3. C) underproduction equal to Q4 minus Q3. D) overproduction equal to Q1 minus Q2.