In the Long Run, Money

question 13

Multiple Choice

In the long run, money

• A) always increases GDP.
• B) will not affect prices.
• C) will lift the standard of living for everyone in a nation.
• D) is neutral.

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Definitions:

External Costs

Costs that are not borne by the parties involved in a transaction but rather by third parties or society as a whole.

Efficient Solution

An outcome wherein resources are allocated in the most effective way, maximizing benefits while minimizing costs or wastes.

Internalize Externalities

The process by which a firm takes into account the external costs or benefits of its activities, typically by incorporating them into its pricing structure.

Negative Externalities

Costs suffered by a third party as a result of an economic transaction, such as pollution caused by industry, which are not reflected in the market prices.