The economic system that is generally considered to be the most efficient at answering the What to produce and the How to produce questions is the:
A. market economy.
B. command economy
C. soviet economy.
D. traditional economy.
Answer: A
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As the multiplier process works through time, the size of the multiplier effect becomes
a. larger. b. smaller. c. constant. d. explosive.
Recall the Application about productivity in the nation of Latvia in the 1990s to answer the following question(s). According to this Application, workers in the European Community were more productive than workers in Latvia in the 1990s, yet despite this, the European Community chose to buy timber from Latvia. If EU governments decide to buy timber only from the European Community, then:
A. its citizens will be better off while their producers may be worse off. B. its citizens and producers will be worse off. C. its citizens and producers will be better off. D. its citizens will be worse off and producers will be better off.
An externality refers to the idea that
A. explicit costs differ from implicit costs. B. decision-makers do not internalize all the costs. C. private and internal costs differ. D. we cannot do anything that does not affect other people.
Modern mainstream macroeconomists agree with the monetarists that:
A. the Fed should increase the money supply at a fixed annual rate. B. velocity is highly stable. C. fiscal policy is largely ineffective. D. "money matters" in the macroeconomy.