Market failure can occur even when the price signals are accurate.
Answer the following statement true (T) or false (F)
True
The market may fail even when the price signals are accurate. The response to price signals, rather than the signals themselves, may be flawed. For example, there may be externalities present.
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Describe the differences (in sign and relative magnitude) between the government purchases multiplier and the tax multiplier
What will be an ideal response?
A repurchase agreement of government securities by the Fed
A) permanently increases bank reserves. B) temporarily increases bank reserves. C) permanently reduces bank reserves. D) temporarily reduces bank reserves.
If a monopolist is able to perfectly price discriminate,
a. consumer surplus is always increased. b. total surplus is always decreased. c. consumer surplus and deadweight losses are transformed into monopoly profits. d. the price effect dominates the output effect on monopoly revenue.
Economic growth may overstate changes in the standard of living if
A. the number of students attending college is increasing. B. the average workweek is increasing. C. people are retiring at a younger age. D. expected life spans are increasing.