Effective price floors prevent the market price from falling to reach equilibrium.
Answer the following statement true (T) or false (F)
True
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What is meant by the term "rational ignorance"?
A) It refers to the fact that policymakers and their constituents have different ideas of what it means to behave rationally and each party deliberately ignores the other's view. B) It refers to the absence of a negative incentive, such as levying a fine for not voting, which results in low voter turnout. C) It refers to a situation where one policymaker deliberately approves legislation he does not support in exchange for a future favorable vote for his own cause. D) It means the lack of an economic incentive for voters to become informed about a pending vote.
When housing prices ________ as they did beginning in 2006 following the housing market bubble, most banks and other lenders tightened the requirement for borrowers, making it ________ for potential home buyers to obtain mortgages
A) fell; easier B) rose; easier C) rose; harder D) fell; harder
Which of the following illustrates how the investment accelerator works?
a. An increase in government expenditures increases aggregate spending so that SnoozeBargain Co. decides to modernize its motels. b. An increase in government expenditures increases the interest rate so that SnoozeBargain Co. decides to modernize its motels. c. An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by SnoozeBargain Co. rises. d. An increase in government expenditures decreases the interest rate so that SnoozeBargain Co. decides to modernize its motels.
Refer to the above figure. The firm is operating using MRP0. An increase in demand for the product has occurred. The relevant curve for the firm after the increase in price
A. is MRP0. B. is MRP1. C. is MRP2. D. could be MRP1 or MRP2 depending upon whether the firm was earning a positive profit.