Assume the role of a critic of advertising. Describe the characteristics of advertising that reduce the effectiveness of markets and decrease the social welfare of society
Advertising manipulates people's tastes and is psychological rather than informational. As a result, advertising creates a desire for a product that might not otherwise exist. Advertising may also impede competition by convincing consumers that products that are identical have significant differences.
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Why are real interest rates more important than nominal interest rates with regard to analyzing the supply and demand of loanable funds?
Exhibit 3-5 Supply for Tucker's Cola Data Quantity supplied per week(millions of gallons) Price pergallon 6 $3.00 5 2.50 4 2.00 3 1.50 2 1.00 1 .50 In reference to Exhibit 3-5, assume the price of Tucker's Cola is $1.00 per gallon. If the price were to rise to $3.00 per gallon, and all other factors, such as taxes, etc. remained constant, the result would be a(n):
A. decrease in supply. B. increase in supply. C. decrease in quantity supplied. D. increase in quantity supplied.
When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease. B. prices, causing them to definitely rise. C. output, causing it to definitely increase. D. prices, causing them to definitely fall.