Keynesian economists believe that
a. prices are very flexible
b. changes in the money supply could cause changes in velocity
c. real GDP is constant in the short run
d. the only motive for demanding money is the transactions demand motive
e. the economy operates at full employment
B
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The "Greenspan doctrine"—central banks should not try to prick bubbles—was based on which of the following arguments?
A) Asset-price bubbles are nearly impossible to identify. B) Monetary actions would be likely to affect asset prices in general, rather than the specific assets that are experiencing a bubble. C) Raising interest rates has often been found to cause a bubble to burst more severely. D) Monetary policy actions to prick bubbles can have harmful effects on the aggregate economy. E) All of the above.
If a monopolist's production process has economies of scale and average cost exceeds marginal cost, then
A) the government could set price equal to marginal cost and subsidize the monopoly. B) the government should not offer a subsidy, since the monopoly can make a profit setting price equal to marginal costs. C) if the government sets price equal to average cost, the monopoly will go out of business. D) the government cannot regulate price.
During 2001-2004, the European Union had a large trade surplus with China.
Answer the following statement true (T) or false (F)
If prices of goods and services are inflexible, then:
A. A negative demand shock would lead to increased real GDP in the short run B. A positive demand shock would lead to increased real GDP in the short run C. A negative demand shock would have no short-run effect on real GDP D. There would be no short-run demand shocks