If the price of a video rental is below its equilibrium price, there will be a ________ of video rentals and the price will ________
A) shortage; rise
B) shortage; fall
C) surplus; rise
D) surplus; fall
A
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Sometimes the government deals with externalities by creating laws to regulate behavior instead of using taxes to correct the market failure. So, requiring auto manufacturers to install a device called a catalytic converter which removes some toxins from exhaust may be preferable to a gas tax that reduces driving levels. This route is often preferred because:
a. c and e. b. it requires less technological development. c. it doesn't penalize drivers of clean cars. d. only car drivers pay for the externality. e. the cost of the externality is unknown.
After legislation is signed into law, the time it takes before actual fiscal stimulus is noticed is termed as: a. signal lag
b. implementation lag. c. impact lag. d. recognition lag.
Which of the following would policy makers monitor to understand personal consumption expenditures (PCEs):
A. S&P 500 Stock Index B. Consumer Price Index (CPI) C. Retail sales D. Real Gross Domestic Product (GDP
A major prediction of the kinked-demand curve model is:
A. stability of production costs in oligopolies. B. price stability in oligopolies. C. stable purchasing behavior by consumers over time. D. price instability in oligopolies.