Which of the following statements about the classical model of the economy is FALSE?
A. Wages and prices are flexible.
B. The economy will always move toward, or be at, full employment.
C. Savings and investment will always be equal.
D. Individuals pursue the public interest, not their own self-interest.
Answer: D
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The market for electricians in a small town might have a different structure than in a large city because
A) cartels are legal in large cities but not in small towns. B) the small town market can only support a few electricians. C) unions are stronger in large cities than in small towns. D) None of the above.
How does the task of production planning happen in a laissez-faire economy?
Which of the following statements is most correct?
A. The Fed can control the size of the monetary base but not the price of its components. B. The Fed can control either the size of the monetary base or the price of its components. C. The Fed can control the amount of reserves, but cannot control the monetary base. D. The Fed can control the make up of the monetary base, but cannot affect the market interest rate.
The "composite good" refers to
A. income not spent on good X in a two-dimensional graphical presentation. B. large purchases that cannot be incrementally divided. C. an abstraction requiring more than a three dimensional graph. D. the notion that consumer pleasure cannot be modeled graphically.