Economists agree that:
A. incentives are likely to be inconsequential unless prices are involved.
B. sometimes incentives facing a decision-maker will not achieve the desired result.
C. markets are always the most efficient means of solving society's problems.
D. social and moral pressures cannot be modeled.
Answer: B
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Everything else held constant, when output is ________ the natural rate level, wages will begin to ________, decreasing short-run aggregate supply
A) above; fall B) above; rise C) below; fall D) below; rise
Double taxation of corporate earnings means
A. for individuals who get dividends on personal income, tax rates are twice as high as for wage earners. B. stockholders pay personal income taxes and corporation taxes on profits. C. stockholders do not get the plowback but still pay taxes on it. D. the corporation tax raises stock prices so individuals also pay a capital gains tax in addition to a tax on dividends.
If demand in a perfectly competitive market decreases, supply will:
A. not change in the short run. B. increase in the long run. C. increase in the short run. D. decrease in the short run.
Which of the following is true?
a. An increase in the interest rate will tend to increase stock prices. b. A reduction in the interest rate will tend to increase stock prices. c. An increase in the inflation rate will tend to increase stock prices. d. There is no reason to believe that changes in interest rates will influence stock prices.