Based on the Figure Below

question 154

Multiple Choice

Based on the figure below. An economy is currently in long-run equilibrium at point B, at an inflation rate of π', which is too high for to sustain economic growth. If an anti-inflationary policy is enacted, the economy will be in short-run equilibrium at point ___ and eventually to a long-run equilibrium at point ____.

• A) A; B
• B) A; C
• C) B; A
• D) B; C

Understand the concept of externalities and how they impact social welfare.

Identify positive externalities and examples of activities that generate them.

Discuss the role of government intervention in addressing externalities and achieving social optimum.

Explain the difference between marginal social benefit (MSB) and marginal social cost (MSC).

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Definitions:

Railroad Laborer

A worker employed in the construction, maintenance, or operation of railroads, often performing physically demanding tasks.

Eugene Debs

An American socialist, political activist, trade unionist, and one of the founding members of the Industrial Workers of the World, who ran for U.S. President five times as the candidate of the Socialist Party.

Socialist Cause

A movement or effort dedicated to promoting socialism, which advocates for public or collective ownership and administration of the means of production and distribution of goods.

Mass Consumption

The widespread purchase and use of goods and services by a large portion of the population, often associated with developed economies and the rise of consumer culture.