Prohibiting price increases in situations of true scarcity could best be described as
A. interfering with the “law” of supply and demand.
B. thwarting the “law” of increasing returns to scale.
C. violating the “law” of increasing cost.
D. interfering with the “law” of diminishing marginal utility.
Answer: A
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If the real interest rate is 7 percent and the inflation rate is 7 percent, then the nominal interest rate is
A) 0 percent. B) 3.5 percent. C) 7 percent. D) 14 percent.
Federal government purchases, as a percentage of GDP
A) have fallen since the early 1950s. B) have remained roughly the same since the early 1950s. C) rose from the early 1950s until the mid 1980s, and then fell. D) have risen since the early 1950s.
The fastest-growing part of the federal budget is
A) national defense. B) payments for services rendered. C) entitlements. D) government salaries.
Analysis indicates that the economy is in a recessionary gap. Which of the following is the most appropriate policy mix in this situation?
a. a budget surplus and expansionary monetary policy b. a budget deficit and expansionary monetary policy c. a budget deficit and contractionary monetary policy d. a budget surplus and contractionary monetary policy