Which one of the following is an example of an external cost?
A) the cost to attend college
B) labor costs to a firm
C) emissions from a factory
D) a house payment owed by a friend
C
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Which of the following is NOT a possible resolution of externalities?
a. Coasian bargaining b. regulatory directives c. taxes and subsidies d. cap and trade e. all of the above are possible resolutions of externalities
If aggregate demand intersects aggregate supply in the horizontal range of the aggregate supply curve, then, other things equal, an increase in government spending will:
a. raise real GDP by the amount indicated by the government spending multiplier and leave the price level unchanged. b. lower real GDP by an amount equal to the increased spending and reduce inflation. c. raise the price level and leave real GDP unchanged. d. raise both real GDP and the price level by a multiple of the initial spending increase. e. have no effect on real GDP or the price level, because all private investment will be crowded out.