If an economy declined by 3 percent in one year, in order for the economy to return to trend growth within two years, it would have to increase at an annual rate that is
A. unknown.
B. greater than 3 percent.
C. less than 3 percent.
D. equal to 3 percent.
Answer: B
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What do economists call the loss society experiences when there is market failure and the production of a good is less than the efficient amount?
A) tax B) subsidy C) price floor D) deadweight loss E) quantity restriction
If elected officials prefer policy actions that make benefits available quickly while deferring costs, they will be inclined to favor
A) an easier monetary policy to counter recession. B) increased appropriations to provide jobs for unemployed workers. C) a wage and price freeze to control inflation. D) all of the above. E) none of the above.
Refer to Figure 4-8. To legally drive a taxicab in New York City, you must have a medallion issued by the city government. Assume that only 13,200 medallions have been issued
Let's also assume this puts an absolute limit on the number of taxi rides that can be supplied in New York City on any day, because no one breaks the law by driving a taxi without a medallion. Assume as well that each taxi provides 6 trips per day. In that case, the quantity of taxi rides supplied is 79,200 (or 6 rides per taxi × 13,200 taxis). This is shown in the diagram with a vertical line at this quantity. Assume that there are no government controls on the prices that drivers can charge for rides. a. What would the equilibrium price and quantity be in this market if there was no medallion requirement? b. If there was no medallion requirement, indicate the area that represents consumer surplus. c. If there was no medallion requirement, indicate the area that represents producer surplus. d. If there was no medallion requirement, indicate the area that represents economic surplus. e. What are the price and quantity with the medallion requirement? f. With a medallion requirement in place, what area represents consumer surplus? g. With a medallion requirement in place, what area represents producer surplus? h. With a medallion requirement in place, what area represents the deadweight loss? i. Based on your answers to parts (c) and (g), are taxicab drivers better off with the medallion requirement for taxicabs than without? j. Are consumers better off with or without the medallion requirement for taxicabs?
An increase in the interest rate will increase the demand for loanable funds
a. True b. False Indicate whether the statement is true or false