Explain how price can be a regulator, that is, how it can coordinate the plans of buyers and sellers
What will be an ideal response?
If the price is too high, the quantity supplied exceeds the quantity demanded so there is a surplus. The surplus forces the price lower. The lower price increases the quantity demanded and decreases the quantity supplied bringing the market to equilibrium, where the quantity demanded equals the quantity supplied and where the plans of buyers and sellers are coordinated. If the price is too low, the quantity demanded exceeds the quantity supplied so there is a shortage. The shortage forces the price higher. The higher price decreases the quantity demanded and increases the quantity supplied bringing the market to equilibrium, again coordinating the plans of buyers and sellers.
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If the federal government runs a budget deficit, but the budget deficit as a percent of GDP is less than the growth rate of real output, the
a. national debt will decrease as a share of GDP. b. national debt will remain a constant share of GDP. c. national debt will increase as a share of GDP. d. size of the national debt (in dollar value) will decline.
The best example of fiscal policy is ___.
A. the Fed lowering interest rates B. the government raising taxes
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A. average cost times quantity sold. B. elasticity of demand divided by percentage change in quantity. C. price of fudge times quantity sold. D. income minus explicit and implicit costs.