If unplanned investment is negative, firms will ________ production and output will ________
A) cut; rise
B) cut; fall
C) increase; rise
D) increase; fall
C
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"Compared to a competitive market, a single-price monopoly decreases the consumer surplus and increases the economic profit." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
Suppose the economy is initially operating at full employment. A reduction in the size of the budget deficit will cause which of the following in the short run?
A) a recessionary gap. B) an increase the price level and a reduction in real GDP. C) an increase in the price level with no change in real GDP. D) an increase in real GDP and an increase in the price level.
Some years ago New York City imposed rent controls in an effort to provide housing at “fair” prices for as many people as possible. The result was a serious shortage of housing and deterioration of existing rental properties. How would an economist have described the result in terms of economic efficiency?
What will be an ideal response?
Explain the ways in which the government can persuade private businesses to invest more in order to speed up the process of capital formation?