Imperfect information on the part of buyers and sellers
A. cannot persist in a market economy.
B. is no longer a problem because the "truth-in-advertising" regulations have been instituted.
C. will not stop the economy from achieving market efficiency, assuming the other conditions for market efficiency hold.
D. remains a barrier to achieving market efficiency, at least in some industries.
Answer: D
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Use the following diagram to answer the next question.
The straight line E drawn through the wavy lines would provide an estimate of the
A. natural rate of unemployment. B. recovery trend. C. recession fluctuation. D. economic growth trend.
Overall limits on an economy's ability to use capital are its
a. absorptive capacity b. budget deficit c. capital flight d. disequilibrium interest rate e. all of the above
If government spending increases, which of the following would be most likely in the short and in the long run? (Both comparisons are with regard to the original price level/output combination.)
a. Short-run increases in the price level, no change in output; long-run increases in output and in the price level b. Short-run increases in output and in the price level; long-run increase in output, decrease in the price level c. Short-run decreases in output and in the price level; long-run increase in the price level, no change in output d. Short-run increases in output and in the price level; long-run increase in the price level, no change in output e. Short-run decreases in output and in the price level; long-run decreases in output and in the price level
When economists say the demand for a good is highly inelastic, they mean that
a. even if the price rose substantially, suppliers would be unwilling to offer much more of the good. b. the facilities utilized by producers of the good are inflexible; producers cannot easily expand their facilities, even in the long run. c. consumers will respond to a change in the price of the good by purchasing substantially more of it. d. a large (percentage) change in the price of a good will result in only a small (percentage) change in the quantity demanded.