Assume that the production of a good imposes external costs upon third parties. If the price and quantity of this good is set by supply and demand the price will be too:
a. high and quantity too low for efficient resource allocation.
b. low and quantity too low for efficient resource allocation.
c. low and quantity too high for efficient resource allocation.
d. high and quantity too high for efficient resource allocation.
c
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According to the rational expectations theory,
a. the expected results of government anti cyclical measures are intensified by the actions of businesses and individuals. b. the easy expansion of the money supply by banks eventually leads to excess productive capacity. c. the expected results of government anti cyclical measures are offset by the actions of businesses and individuals. d. the limited expansion of the money supply by banks eventually leads to excess productive capacity.
In order to increase the capital stock, society must divert ________ that could be otherwise used to increase the supply of ________.
A. money; labor. B. money; consumer goods C. credit; labor D. resources; consumer goods