Which of the following measures net exports for the year, including transactions involving services, investment income, and transfers?

Why do externalities arise?

a. The costs of production are not borne by the producer. b. An economic activity imposes a burden on those who are not directly involved in it. c. The consumption of a public good is nonexcludable. d. The government produces goods and services which are consumed by only a particular group of people. e. Goods of mass consumption are not produced as they do not yield profit for the producers.

Which of the following helps explain how the multiplier and crowding-out effect impact the size of the shift in aggregate demand from a tax change

a. Tax cuts stimulate consumer spending, earnings and profits rise, which further stimulates consumer spending—the multiplier effect. b. The higher income leads to an increase in the demand for money, which tends to lead to higher interest rates. c. The higher interest rates make borrowing more costly and reduce investment spending—the crowding-out effect. d. All of the above