During periods when the inflation rate fluctuates widely,
a. all relative prices increase at the same rate, leaving money prices constant
b. economic efficiency increases because decision makers pay closer attention to changes in money prices
c. uncertainty about changes in relative prices causes a decrease in economic efficiency
d. all money prices increase at the same rate, leaving relative prices constant
C
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Chapter 16 on "Financial System Design" calls the asymmetric information problem discussed in earlier chapters the __________ conflict
A) manager-stockholder B) stockholder-lender C) manager-lender D) profit-risk
If the government were to simultaneously cut the personal income tax and the corporate profits tax, the equilibrium interest rate
A) would fall. B) would rise. C) would be unaffected. D) might either rise or fall.
Taxes on polluting emissions are
a. more efficient than direct controls. b. used by all economic societies. c. less effective than direct regulations. d. easily enforced through the criminal justice system.
A major reason for the existence of inflationary and deflationary gaps is that
a. corporations do most of the nation's saving. b. saving and investing are done by people with no social conscience. c. consumers do most of the nation's saving. d. saving and investing are done by different groups.