Which is NOT an example of government intervention in the economy?
A. The Great Recession
B. The Federal Reserve
C. The Food and Drug Administration
D. The Troubled Asset Relief Program
Answer: A
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Advocates of the New Growth Theory claim that they have improved upon the neoclassical model by
a. focusing on the rate of investment, rather than the amount of investment b. adding population growth to the list of key variables c. assuming that knowledge obtained in one country would be easily available to those in othercountries d. making technological change a part of the model, rather than something brought in from theoutside e. none of the above
Everything else held constant, the greater the number of close substitutes there are for a good, the smaller the price elasticity of demand for that good
a. True b. False Indicate whether the statement is true or false
The Fed loses some control over the interest rate once it targets the money supply,
a. but the interest rate doesn't move in an inappropriate direction with respect to the Fed's monetary policy b. and the interest rate often moves in the opposite of the targeted direction c. but it can still dictate what the interest rate will be d. and loses as well control over open market operations which are linked to the interest rate e. but still maintains indirect control through open market operation
If the price of a good is below the shutdown point, a perfectly competitive firm earns zero profits
a. True b. False Indicate whether the statement is true or false