A tax and a regulation that have the same effect on output in the short run will have different effects in the long run. _____ creates profits which encourages _____, while _____ creates losses and encourages _____
a. Corrective taxation; entry; regulation; exit
b. Regulation; entry; corrective taxation; exit
c. Corrective taxation; exit; regulation; entry
d. Regulation; exit; corrective taxation; entry
b
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The central bank in the New Keynesian model pursues a policy of
A) fixed money supply. B) inflation between 2 and 3%. C) zero inflation. D) targeting the market interest rate.
An increase in the price of labor used to produce good Y will lead to
A) an increase in the market clearing price of good Y. B) an increase in the supply of good Y. C) a decrease in the demand for good Y. D) an increase in the demand for good Y.
Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations
a. True b. False Indicate whether the statement is true or false
A liquid trap can be avoided if the central bank:
A. charges banks fees for keeping reserves. B. pays interest on bank deposits at banks. C. pays interest on reserves. D. charges banks fees for making loans.