A law that restricts plant closings will
A) make the economy more efficient by slowing down the movement of resources to a more optimal rate.
B) make the economy more efficient by reducing poor decisions on the part of entrepreneurs.
C) prevent resources from flowing to their highest-valued uses.
D) provide useful market signals to all parties in the industry.
Answer: C
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In the simple Keynesian model, if there is an autonomous investment falls by $20 billion and the MPC (b) is 0.60, the equilibrium income level will increase by
a. $13.3 billion. b. $20 billion. c. $50 billion. d. $100 billion.
In economic models of the public sector, the median voter model presents an extreme view of the way that the public sector allocates resources
a. True b. False
If equilibrium level of real Gross Domestic Product (GDP)
is less than the full-employment real Gross Domestic Product (GDP) consistent with the position of the economy's long-run aggregate supply (LRAS) curve, then the difference between full-employment real Gross Domestic Product (GDP) and current equilibrium real Gross Domestic Product (GDP) is A) an aggregate demand shock. B) an aggregate supply shock. C) a recessionary gap. D) an inflationary gap.
Explain the share-the-gains, share-the-pains theory. How does it differ from the capture hypothesis?
What will be an ideal response?