In the case of a nonexcludable public good, the market will fail to produce the good because of the free rider problem
Indicate whether the statement is true or false
True
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Keynesians argue that changes in wages will lag price level changes even if expectations are formed rationally because
A) workers have very little bargaining power compared with that of management. B) only a small percentage of workers are unionized. C) wages are often set by long-term contracts. D) workers often have incorrect information.
Consider a particular market-clearing price and quantity under a perfectly competitive equilibrium. As the demand curve at this point becomes more inelastic, the consumer surplus in the market tends to:
A) increase. B) decrease. C) remain the same. D) We do not have enough information to answer this question.
Suppose that the economy has witnessed an 8 percent increase in its money supply over the last few years and the Fed now announces a plan to increase the money supply by 4 percent per year. What will be the public response, assuming that the Fed has a reputation for always implementing its announced plans?
a. High-wage contracts will prevail, and the economy will experience lower inflation at the cost of higher unemployment. b. High-wage contracts will prevail, and the economy will experience lower unemployment at the cost of higher inflation. c. Low-wage contracts will emerge, and the economy will experience lower inflation with no change in the unemployment rate. d. Low-wage contracts will emerge and the economy will experience higher unemployment with no change in the inflation rate. e. Low-wage contracts will emerge, and the economy will experience lower inflation at the cost of higher unemployment.
Under a communist system,
A. consumer decisions are not influenced by prices. B. resources are owned and controlled by the government. C. individual freedom is maximized. D. the market guides resources, but the state dictates what should be produced.