Private solutions to externalities are most effective if ________
A) transaction costs associated with bargaining are low
B) transaction costs associated with bargaining are high
C) property rights are not defined clearly
D) a large number of people are affected by the externalities
A
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If the tariff on computers is not changed, but domestic computer producers shift from domestically produced semiconductors to imported components, then the effective rate of protection in the computer industry will
A) increase. B) decrease C) remain the same. D) depend on whether computers are PCs or "Supercomputers." E) no longer apply.
The rational expectations theory indicates that expansionary policy will:
a. stimulate real output in the long run but not in the short run. b. expand real output and employment if the public quickly anticipates the effects of the expansionary policy. c. equalize real and nominal interest rates during lengthy periods of inflation. d. fail to increase employment because individuals will anticipate it and take actions that will offset its impact.