According to Friedrich Hayek and his followers, the booms and busts of the business cycle are primarily the result of
a. fluctuations in aggregate demand.
b. the "animal spirits" of private investors.
c. excessive credit expansion and artificially low interest rates that trigger malinvestment.
d. the unwillingness of political decision-makers to follow the advice of macroeconomists who know how to alter fiscal policy in a manner that would virtually eliminate the ups and downs of the business cycle.
C
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What will be an ideal response?
When actual real GDP is above natural real GDP, we say that
A) the output gap is positive. B) the output gap is negative. C) the output gap has been eliminated. D) the output gap cannot be calculated.
Consumer surplus received from the purchase of a good is $500 . If the producer surplus received for the same good is $600, then the total surplus is $1,100
a. True b. False Indicate whether the statement is true or false
A legal system that provides secure private property rights and unbiased enforcement of contracts
a. is unnecessary for the smooth operation of markets. b. reduces the efficiency of markets. c. enhances the efficiency of markets. d. makes it easier for sellers to cheat or defraud consumers.