The new Keynesian model has ________ in common with the real business cycle model
A) wage and price stickiness
B) a theory of aggregate demand
C) procyclical inflation
D) a microeconomic foundation
D
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An inherent weakness of ________ is the absence of the profit incentive
A) government-directed credit B) government-backed deposit insurance C) private loans D) prudential supervision
Gasoline and bicycles are substitutes in consumption. Suppose we increase the federal gasoline tax to $1 per gallon
Initially, the gasoline price rises due to the tax, and the demand curve for bicycles shifts rightward because these goods are substitutes. Then, the bicycle price rises, and the demand curve for gasoline shifts rightward. Assuming the general equilibrium is achieved in both markets after these two steps, which of the following statements is NOT true? A) Partial equilibrium analysis only focuses in the first-round changes in the gasoline market (ignoring the secondary effects that arise from changes in the bicycle market). B) Partial equilibrium analysis would predict a larger shift in the price and quantity demanded for gasoline than a general equilibrium analysis. C) The price increase in gasoline is larger under the general equilibrium approach, but the change in the quantity of gasoline demanded is smaller than under partial equilibrium analysis. D) All of these statements are true.
Television would have been considered a "new good" type of innovation because
A. consumers already regularly listened to the radio for entertainment. B. it gave companies a new source of advertising revenues. C. it enhanced the quality of life for most people in the economy. D. it had no equivalent in the past.
Our balance of trade is part of our ________________.
Fill in the blank(s) with the appropriate word(s).