According to Keynes, lengthy recessions can occur because
A. nominal wages fall rapidly when there is a decrease in aggregate demand, which leaves workers with less income to spend.
B. the stock market tends to overreact to economic forecasts.
C. there is significant downward rigidity in prices and wages.
D. None of the choices are correct.
C. there is significant downward rigidity in prices and wages.
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Which of the following is true if the price of coffee increases?
A. The demand for tea, a substitute good, will decrease. B. The demand for coffee will increase. C. The demand for tea, a substitute good, will increase. D. Both the demand for coffee and tea will increase.
Exhibit 7-14 Cost curves
In Exhibit 7-14, constant returns to scale only exist for output levels between:
A. 0 and 1,000. B. 1,000 and 2,000. C. 2,000 and 3,000. D. 3,000 and 4,000.
Under perfect competition, the demand curve facing the firm is determined by
A) the intersection of the industry demand and supply curves. B) the tastes and preferences of consumers. C) utility maximizing behavior on the part of consumers. D) the willingness of the firm to supply the good.
A social welfare function (SWF)
A) depicts the preferences of the president of the country. B) combines various consumers' utilities to provide a collective ranking of allocations. C) indicates the choices that are acceptable by most consumers. D) is the outcome of a majority voting decision rule.