Communist countries worked under the premise that
a. people, when left on their own without government intervention, will find the best use of available resources
b. central planners were in the best position to determine the allocation of scarce resources in the economy.
c. households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce resources.
d. allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources.
b
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If the aggregate price level ________, but nominal wages stay fixed, labor demand ________
A) falls; remains unchanged B) rises; falls C) rises; remains unchanged D) falls; falls
A major complication with fiscal policy to control aggregate demand is the
a. inability to agree on macroeconomic goals. b. accuracy of modern forecasting models. c. inability to change aggregate demand with fiscal tools. d. constantly changing investment and net exports because of other events.
The marginal rate of substitution is the
A) rate at which the consumer will give up one good for an additional unit of the other good, such that total satisfaction is constant. B) rate at which the consumer can trade one good for the other in the marketplace. C) change in the quantity of one good that changes the utility received by one unit. D) same thing as the marginal utility of a good.
Refer to the above figure. Unexpected expansionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run
A. the unemployment rate will be larger than the rate before the expansionary monetary policy. B. the unemployment rate will be the same rate as before the expansionary monetary policy. C. the unemployment rate will be smaller than the rate before the expansionary monetary policy. D. the unemployment rate can increase or decrease depending upon how much the LRAS will shift.