If everyone expects prices to fall but they do not, then
a. nothing happens.
b. the IS curve shifts to the left and the AD curve shifts to the right.
c. both IS and AD shift to the right.
d. both IS and AD shift to the left.
e. the IS curve shifts to the right, the AD curve shifts to the left.
C
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If the incentive to take advantage of a conflict of interest is high
A) removing the economies of scope that created the conflict may induce higher costs because of the decrease in the flow of reliable information. B) then the government must step in to remove the conflict. C) the costs of non-action in removing the conflict will always be higher than the cost of removing the conflict. D) firms will always step in and work to remove the conflict.
Assume perfect capital mobility. Under a fixed exchange rate system, expansionary fiscal policy causes income to _____, while under flexible exchange rates expansionary fiscal policy causes income to _____
a. increase; increase b. increase; remain unchanged c. increase; decrease d. remain unchanged; increase
In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?
a. 3 percent per year b. 5 percent per year c. 7 percent per year d. 9 percent per year
In 18th century Europe, governments gave guilds legal authority to limit production of goods. This authority obstructed the market mechanism because the guild's actions prevented the forces of ________ from coordinating the self-interested decisions of
producers and consumers. A) absolute advantage B) demand and supply C) opportunity cost D) nature