If a surplus exists in a market, then we know that the actual price is
a. above the equilibrium price, and quantity supplied is greater than quantity demanded.
b. above the equilibrium price, and quantity demanded is greater than quantity supplied.
c. below the equilibrium price, and quantity demanded is greater than quantity supplied.
d. below the equilibrium price, and quantity supplied is greater than quantity demanded.
Answer: a. above the equilibrium price, and quantity supplied is greater than quantity demanded.
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The United States is an example of a mixed economy
a. True b. False Indicate whether the statement is true or false
Assume that consumption when young and consumption when old are both normal goods. The income effect of an increase in the interest rate will result in
a. an increase in saving when young. b. an increase in saving when old. c. a decrease in saving when young. d. a decrease in saving when old.
Which of the following is an important advantage of discretionary monetary policy?
a. Influencing the political business cycle b. Flexibility to deal with changing economic conditions c. Limiting the opportunities for abuse of power by policymakers d. Avoiding the time inconsistency of policy problem
Advocates of stabilization policy argue that when there is a recession, the government should increase the money supply and increase government expenditures.
a. True
b. False
Indicate whether the statement is true or false