What is the transitional gains trap? In New York, in order to be legal a cab driver must have a medallion (i.e., a license) to operate
With respect to New York cab drivers who, if anyone, received transitional gains? What if the medallion program were ended tomorrow. Who would be harmed?
The transitional gains trap states that although regulation can benefit the regulated industry initially, in the long run any gains will be competed away. However, although the regulation provides no benefits in the long run, the removal of the regulation produces transitional losses. The individuals who received transitional gains in New York City were those cab drivers and companies given the initial medallions. All subsequent medallion owners received little to no benefit. If the medallion program were ended tomorrow, all holders of medallions would be harmed as the current value of their medallion would disappear.
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If velocity is constant and equal to 2, a $10 billion shift of the LM curve to the left will be produced by a __________ in the money supply
A) $5 billion increase B) $5 billion decrease C) $20 billion increase D) $20 billion decrease
New Keynesian theory says that
a. changes in the money supply can have long run and short run effects on real variables. b. changes in the money supply can have short run effects on real variables, but not long run effects. c. changes in the money supply can have long run effects on real variables, but not short run effects. d. changes in the money supply have no effect on real variables in the short run or the long run.
Inflation: a. always reduces real income
b. never reduces real income. c. reduces the real income of workers when wages increase more than prices do. d. reduces the real income of workers when wages increase less than prices do. e. increases the real income of workers only when wages increase less than prices do.
Under which of the following conditions could the monopoly price be less than the price that would result in perfect competition? When there are
a. diminishing marginal returns b. substantial economies of scale c. higher unit costs d. increasing costs e. constant returns to scale