Policymakers' use of stabilization policy to eliminate output gaps is more appropriate when an economy self corrects very ________ and when the output gap is very ________.
A. rapidly; small
B. slowly; small
C. rapidly; large
D. slowly; large
Answer: D
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In the simple liquidity preference model, if the money demand curve is elastic, then:
A. small changes to the money supply will cause large changes to the interest rate. B. small changes to the money supply will cause insignificant changes to the interest rate. C. even large changes to the money supply will cause small changes to the interest rate. D. only large changes to the money supply will cause large changes to the interest rate.
The ____ takes on particular importance because it is a self-enforcing equilibrium. That is, once this equilibrium is established, neither firm has an incentive to move
a. socially optimal solution b. Nash equilibrium c. disequilibrium d. payoff matrix
An individual firm has little incentive to voluntarily internalize any external costs it was creating because: a. it would shift its cost curves downward
b. it would put it at a competitive disadvantage compared to its rivals. c. it would have to increase output to make up for the added costs. d. they do not care at all about other people.
When the price of movie tickets in a certain town was reduced, the movie-theaters' revenues did not change. This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of:
A. 1.0 B. Greater than 1 C. 0.5 D. Zero