All of the following are characteristics of allocation by rationing EXCEPT
a. lack of fairness.
b. high administrative cost.
c. efficiency.
d. diminished incentive for workers.
Ans: a. lack of fairness.
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Suppose the economy is initially in short-run equilibrium and the Fed decreases the nominal money supply. If the price level remains constant, real GDP will ________ relative to potential GDP and the real interest rate will ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
The equilibrium or market clearing price occurs at the point at which
A) quantity demanded equals quantity supplied. B) the supply curve intersects the horizontal axis. C) the demand curve intersects the vertical axis. D) there is a shortage of the desired good.
Refer to the information provided in Figure 34.4 below to answer the question(s) that follow.
Figure 34.4Refer to Figure 34.4. The demand and supply of pounds are S1 and D1. Which of the following can change the equilibrium exchange rate ($/pound) to $2.50 and the equilibrium quantity to 400 pounds?
A. an increase in income in Great Britain B. an increase in the price level in Great Britain C. a sudden dislike of British products in the United States D. a sudden dislike of U.S. products in Great Britain
TruLite is managed by Fred Powell. It has three stages of production: (1) light fabrication, (2) switch assembly, and (3) boxing. Chris Self works in the switch assembly department. He is productive and seems to work hard. Powell decides to change Chris Self's pay system to a performance-based pay system that will be determined by output per hour. Chris resists the change and asks for increase in his base pay. What is Chris Self's problem? Is he irrational or does he understand something about the production system that Fred Powell does not understand?
What will be an ideal response?