Milton Friedman and others, citing imperfections and mistakes in the administration of fiscal policy, argue that government stabilization policies
A. often destabilize the economy.
B. are usually in doses too small to correct fluctuations in the economy.
C. are always for political gain, not economic stability.
D. always cause inflation.
A. often destabilize the economy.
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A rise in deposit rates, all else constant, __________ a bank's __________ risk
A) lowers; credit B) lowers; interest rate C) raises; credit D) raises; interest rate
Which of the following best describes the "guiding function" of price?
A) In response to a surplus or shortage in two markets, price serves as a "guiding function" by decreasing in one market and increasing in the other market in the short run. B) The guiding function of price is the movement of resources into or out of markets in response to a change in the equilibrium price of a good or service. C) The guiding function of price occurs when the market price changes to eliminate the imbalance between supply and demand caused by a shortage or surplus at the original price. D) The guiding function usually occurs in the short run while the rationing function usually occurs in the long run.
An increase in product price will cause:
A. quantity demanded to increase. B. the supply curve to shift to the left. C. quantity supplied to decrease. D. quantity demanded to decrease.
Related to the Economics in Practice on page 306: Almost 90 percent of advertisements seen in movie theaters are produced and sold by two firms. This movie theater advertisement industry would be characterized as
A. monopolistically competitive. B. a monopoly. C. an oligopoly. D. perfectly competitive.