An economy is said to be in the liquidity trap when the short-term ________ is down to zero
A) real interest rate on corporate bonds
B) nominal interest rate on government bonds
C) nominal interest rate on corporate bonds
D) real interest rate on government bonds
B
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In deciding which model of a car to buy, microeconomic theory maintains that consumers are concerned about the absolute price of a particular car, rather than its relative price
Indicate whether the statement is true or false
Public goods, as defined in economics, are a.. goods that are provided by the government b. overprovided because of their public nature c. provided efficiently in competitive markets but at too low a level d. subject to free-rider problems e. characterized by rivalry and nonexclusiveness
Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?
a. an increase in the price of crude oil, a key ingredient required for the production of gasoline b. the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles c. a recession that substantially reduces the income of households d. an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven
Answer the following questions true (T) or false (F)
1. Productive efficiency does not hold for a profit-maximizing, monopolistically competitive firm in the long-run equilibrium because the firm operates along the diseconomies of scale region of its average total cost curve. 2. Monopolistically competitive firms achieve allocative efficiency but not productive efficiency. 3. A monopolistic competitor does not earn profits in the long run unless it can successfully differentiate its product in the minds of its consumers.