Comment on the following statement. "Once general equilibrium is achieved this will result in a long-run equilibrium as well."
What will be an ideal response?
First of all it is unlikely that general equilibrium would occur in the first place because all of the conditions that are necessary for it to take place do not appear to have taken shape in the real economy. But even if general equilibrium were possible it is unlikely that this would be a permanent state of affairs as there will always be changes in demand and supply in input and output markets that will disturb this equilibrium.
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According to the Monetarists, "Policy activism" is difficult if not impossible to perform successfully because
A) the timing of policy impacts on nominal GDP are known. B) the magnitude, size of impacts are known. C) the timing and magnitude of the impact of AD disturbances are known, forecasted with precision. D) Monetarists believe all of the above are correct.
Which of the following statements refers to the wage-price spiral process?
(A) The salary of a worker fluctuates with the amount of sales he or she accomplishes per month. (B) Employees only receive a raise when their purchasing power has been eroded by inflation. (C) An employee loses his or her job, finds a position at another company, and is underemployed. (D) A worker receives a raise, which increases costs for the employer.
People are unlikely to choose to pay extra for a low-emissions automobile, because they:
A. do not fully understand the environmental benefits of lower emissions. B. are better off "free-riding" on others' attempts to reduce emissions. C. would have to sacrifice fuel efficiency and automotive performance. D. cannot afford the extra expense of "green" technology.
Which of the following statements about Fed management of the money supply is correct?
A) Over the past thirty years, the Fed has always stayed within its pre-announced target rates for growth in M2. B) The most common tool used by the Fed is a change in the required ratio of reserves to deposits. C) The rate at which the Fed lends money to banks is called the "Federal Funds rate." D) The Fed must report each week to Congress on the conduct of monetary policy. E) none of the above