According to Keynesians and monetarists, in the short-run, what happens to the aggregate price level when the money supply increases?
a) The aggregate price level falls.
b) The aggregate price level rises.
c) The aggregate price level falls and then rises.
d) The aggregate price level does not change.
Ans: b) The aggregate price level rises.
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Some would cite the purchase of defective products and the rising cost of health care as market failures. Argue that these are not true market failures.
What will be an ideal response?
If a game contains private information, then
A) the game's outcome is affected. B) firms will engage in cheap talk to coordinate their actions. C) players will decide not to play the game. D) third-party negotiations are necessary to resolve the information gap.
The Economic Report of the President gives the following age distribution of the United States population for the year 2000:
United States Population By Age Group, 2000 Outcome (age category Under 5 5-15 16-19 20-24 25-44 45-64 65 and over Percentage 0.06 0.16 0.06 0.07 0.30 0.22 0.13 Imagine that every person was assigned a unique number between 1 and 275,372,000 (the total population in 2000). If you generated a random number, what would be the probability that you had drawn someone older than 65 or under 16? Treating the percentages as probabilities, write down the cumulative probability distribution. What is the probability of drawing someone who is 24 years or younger? What will be an ideal response?
When what people pay does not necessarily reflect the real value they put on a good, it is likely that the:
A. free rider problem does not exist. B. good will be undersupplied. C. good is easily excludable. D. not a socially desirable good.