Answer the following questions true (T) or false (F)
1. One factor which brought on the recession of 2007-2009 was the financial crisis in 2008.
2. New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.
3. Monetarists believe that the quantity of money should be increased at an increasing rate.
1. TRUE
2. FALSE
3. FALSE
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If society allows firms to freely pollute the environment, then which of the following is true?
a. Market equilibrium output will be equivalent to the efficient output level. b. Market equilibrium output will be too low relative to the efficient output level. c. Market equilibrium output will be too high relative to the efficient output level. d. The efficient output level can be achieved by giving firms a subsidy for the pollution they generate.
Three forces played a significant role in preparing Indian policy makers for economic reform. Describe them
What will be an ideal response?
Which of the following examples will have a fall in revenue?
a. When the price of hamburger buns decreases 10 percent, sales increase 12 percent. b. When the price of ice cream decreases 4 percent, sales increase 8 percent. c. When the price of lemons decreases 5 percent, sales increase 3 percent. d. When the price of salsa decreases 8 percent, sales increase 8 percent.
Suppose a friend claims he is helping the economy by throwing trash on the street rather than in trash cans because the extra expenditures necessary to clean up the streets will increase GDP. Your friend is
A. Wrong. GDP will not be affected because this is not a socially desirable use of resources and will therefore not be included in GDP. B. Right. GDP will increase, ceteris paribus. C. Wrong. GDP will not be affected because nothing new is being produced. D. Wrong. GDP will decline because the neighborhood will be less clean.