A 10 percent rise in the price of housing reduces the quantity demanded of housing by 3 percent. We can conclude that the demand for housing is:

Refer to Figure 12.3. Suppose the economy is initially at full employment with real GDP equal to potential GDP, and the Fed does not target interest rates, allowing the real interest rate to change like it did during the Great Depression. This would be reflected as a movement from ________ in the IS-MP model and ________ the Phillips curve.

A) point Y to point X; a movement up B) point X to point Y; a movement down C) point Z to point Y; a movement up D) point Y to point Z; a movement down

Although the reciprocal nature of the problem suggest that the proceeds of a corrective tax not be paid to as compensation to those harmed, if compensation is paid to those harmed by externalities _____

a. the payment should be made from general revenues to keep the corrective action separate from the compensatory part b. the payment should be set equal to marginal external cost c. the payment should be made in one lump sum to minimize incentives to create future problems d. the payment should be double the amount of the corrective tax to justly compensate the victims