In the case of an external benefit generated by an activity, such as education, a private subsidy for that activity can achieve an efficient outcome

If workers and firms know that the Federal Reserve is following an expansionary monetary policy, workers and firms will expect inflation to ________ and will adjust wages so that the real wage ________

A) decrease; decreases B) increase; remains unchanged C) increase; increases D) increase; decreases

Full employment is defined by the Council of Economic Advisers as

A) 4 percent. B) every adult who wants to work has a job. C) the unemployment rate associated with zero inflation. D) the unemployment rate associated with the normal frictions in the labor market.