When a cartel breaks down and its members start cheating, the behavior in the industry becomes a
A) noncooperative game.
B) zero-sum game.
C) high stakes game.
D) positive sum game.ax
Answer: A) noncooperative game.
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Allocative efficiency
a. is important for economic theory but not relevant to environmental policy b. calls for the equality of additional benefits and additional costs c. is automatically achieved when cost-effectiveness is achieved d. requires that the total costs to society linked to environmental policy are equivalent to the associated total benefits
Refer to the above figure. Suppose the economy is in equilibrium at point A
If the Fed tries to stimulate the economy by undertaking an expansionary monetary policy action and this is not expected by the people in the economy, we would expect to see A) aggregate supply shifts up as people anticipate the effects of the expansionary monetary system. In the short run, real GDP falls to $13 trillion and the price level rises to 120. In the long run, real GDP returns to $14 trillion, and the price level increases further, to 150. B) aggregate demand increases but people would anticipate this, causing the short-run aggregate supply curve to shift up at the same time, with the new equilibrium of $14 trillion of real GDP and a price level of 100. C) aggregate demand increases, real GDP increases, and the price level increases in the short run. In the long run, people realize the real situation, causing the short-run aggregate supply curve to shift u
Economists refer to the series of induced increases in consumption spending that result from an initial increase in autonomous expenditures as the ________ effect
A) multiplier B) expenditure C) aggregate demand D) consumption
Which of the following factors would be most likely to encourage investment and capital formation in a less-developed nation?
a. High and variable rates of inflation. b. Tariffs and quotas that restrict international trade. c. A legal system that provides for secure property rights and evenhanded enforcement of contracts. d. High marginal tax rates.