From the mainstream perspective, instability in the economy is due to
A. volatility of the labor supply.
B. excessive use of government policies and regulation.
C. volatility of the money supply.
D. volatility of aggregate demand.
Answer: D
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Suppose all firms have constant marginal costs that are the same for each firm in the short run. In this case, the market level supply curve is ________ and producer surplus equals ________:
A) perfectly inelastic, fixed costs B) perfectly inelastic, zero C) perfectly elastic, fixed costs D) perfectly elastic, zero
Many modern economists
a. combine Keynesian short run and neoclassical long-run theories to understand the economy. b. use only Keynesian theories to understand the economy. c. use only neoclassical theories to understand the economy. d. use Rational and Adaptive Expectation theories to understand the economy.
Keynes asserted that investment is more responsive to business expectations, technological changes and innovation, than to changes in interest rates
Indicate whether the statement is true or false
Denmark is not a member of the Eurozone but is a member of the ERM. What are the advantages to Denmark of NOT being a member of the Eurozone?
A) There are none. Denmark stubbornly wants to have its own currency (the krone). B) The Danish central bank loses its monetary autonomy by not joining the Eurozone. C) There are not very many transactions between Denmark and Eurozone countries, so transaction gains from membership in the Eurozone would be small for Denmark. D) The ERM allows much more exchange rate flexibility (+/- 15%) than the Eurozone.