"The dramatic reduction of the money supply during the 1930s was responsible for the Great Depression. The macroeconomy is intrinsically stable if left alone by the prying hand of government. The Federal Reserve Board, instead of tightening money during booms and loosening money during recessions (policies that are ineffective due to time lags), should simply increase the supply of money at a
steady rate of 3 to 5 percent per year.". This statement reflects which school of thought?
a. The traditional Keynesians
b. The monetarists
c. The traditional classicals
d. The new Keynesians
e. The new classicals
b
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In the long run, a perfectly competitive firm will
A) be able to make an economic profit. B) produce but incur an economic loss. C) make zero economic profit. D) not produce and will incur an economic loss equal to its total fixed cost. E) not produce but not incur an economic loss.
An efficiency wage
a. gives an employee an incentive to shirk his duties. b. is lower than the equilibrium wage for that position and region. c. is higher than the equilibrium wage for that position and region. d. both a and b are correct.
Monetarists believe
A. the economy is unstable. B. the economy does not equilibrate quickly. C. the economy is rigid. D. the economy is stable.
Demand is more elastic for an item for which few substitutes are available.
Answer the following statement true (T) or false (F)