According to real business cycle theory, an increase in taxes
a. would significantly reduce labor supply, increase employment, and decrease output.
b. a decline in employment but not in output.
c. would significantly reduce labor supply, and decrease employment and output.
d. no change in output and employment.
C
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Which of the following is not an incentive bureaucrats have to increase the size of their budgets?
a. They can increase their income by having a higher budget. b. Increased budgets mean more power and prestige. c. Higher budgets are necessary to maximize scale efficiencies. d. A nice working environment is positively correlated with a higher budget.
Common resources are those that are:
a. excludable and rivalrous. b. excludable and nonrivalrous. c. nonexcludable and nonrivalrous. d. nonexcludable and rivalrous.