The effect lag occurs because it takes policymakers some time to recognize that a problem exists in an economy
a. True
b. False
Indicate whether the statement is true or false
False
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Moral hazard is a problem in providing deposit insurance because insured banks are
A) more likely to make bookkeeping errors. B) overly cautious due to extra regulations adopted by the FDIC. C) more likely to provide bank managers with lavish perquisites. D) encouraged to take on more risk.
Because there is no way to account for them, the official unemployment rate does not include discouraged workers. What would happen to the unemployment rate if, because of a program that gave them new hope, all discouraged workers suddenly begin reporting themselves as ready to work?
a. The official unemployment rate would remain unchanged. b. The size of the labor force would increase. c. The size of the labor force would remain unchanged. d. The official unemployment rate would decrease. e. The size of the underground economy would shrink.
The formula for price elasticity of demand that is used in practice
a. usually drops all minus signs. b. usually takes on different values at different points on the demand curve. c. may calculate the percentage change in price between P1 and P2 as "(P2 ? P1) as a percentage of (P1 + P2)/2." d. All of the above are correct.
The term market power refers to
A. The government's ability to change market outcomes. B. The government's authority to tax businesses. C. A firm's ability to alter the market price or quantity of a good or service. D. A firm's ability to eliminate free riders.