Explain what a black market is and how it functions. What is a black market generally a response to?
What will be an ideal response?
It is a market in which illegal trading takes place at market-determined prices. It's usually the result of the government imposing a price ceiling which results in a shortage of that particular product. The black market is a way for consumers and firms to get around the restriction.
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We can use macroeconomic analysis to
A) learn how to balance a checkbook. B) understand why economies grow. C) study the choices made by households. D) understand marginal changes in the macroeconomy.
Without price competition, there is no incentive for product differentiation.
Answer the following statement true (T) or false (F)
One reason why an economy may not smoothly adjust to a macroeconomic shock is that
A) prices are flexible in the long run. B) prices are sticky in the short run. C) wages are sticky in the long run. D) prices and wages are sticky in the long run.
Exhibit 8-8 Consumption function
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In Exhibit 8-8, which of the following could cause the movement from C1 to C2?
A. a decrease in real asset holdings B. lower interest rates C. expectations that the economy will grow D. expectations of lower future prices