One reason economists began to look at more effective coordination mechanisms is that they began to:
A. focus more on the assumption that people are rational.
B. focus more on people's predictably irrational behavior.
C. rely more heavily on deductive reasoning.
D. use advanced calculus in their models.
Answer: B
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The argument advanced by Milton Friedman for adopting a monetary growth rule is that
A) active monetary policy potentially destabilizes the economy. B) a constant rate of growth in the money supply would eliminate the booms and recessions that make up the business cycle. C) the growth rate of M1 has been unstable. D) the Fed can control the money supply, but not the level of interest rates.
In the long-run, an increase in the budget deficit and an expansionary monetary policy would:
A) increase the price level only. B) increase both the price level and real income. C) increase real income only. D) none of the above.
The above figure shows the market for steel ingots. An externality can be seen because
A) the social marginal cost exceeds the private marginal cost. B) the private marginal cost exceeds the social marginal cost. C) the optimal quantity of steel is zero. D) not enough steel gets produced by the competitive market.
Japan's remarkable economic growth in the 20th century was a result of _____.
Fill in the blank(s) with the appropriate word(s).