Given That Most People Like the Smell of Baking Cinnamon

question 133

Multiple Choice

Given that most people like the smell of baking cinnamon rolls and dislike the smell of burning tires, baking cinnamon rolls generates ________ externality, and burning tires generates ________ externality.

• A)a positive; a negative
• B)a negative; a positive
• C)a positive, no
• D)no; a negative

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Definitions:

Producer Price Index

A measure of the average changes in prices received by domestic producers for their output.

GDP Deflator

An economic metric that converts output measured at current prices into constant-dollar GDP to adjust for inflation.

Gini Coefficient

The Gini coefficient is a measure of income inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality), used to assess wealth distribution.

Real Interest Rate

The interest rate expressed in dollars of constant purchasing power as a percentage of the amount loaned; the nominal interest rate minus the inflation rate.