Are there real-world markets that resemble double oral auctions? Suppose you had to organize a double oral auction for a good that has perfectly elastic demand. Do you expect prices to approach the competitive equilibrium?
What will be an ideal response?
Double oral auctions are similar to how trading actually works on stock exchanges—traders announce bids and asks and if they match, a trade is executed.
Double oral auction experiments with many different market variants - including varying the elasticity of supply and demand and the numbers of buyers and sellers - have shown that the equilibrium price in the market will be very close to where the supply and demand curves intersect. So, the price in a double oral auction for a good with perfectly elastic demand is also expected to approach the equilibrium price.
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Suppose the target exchange rate set by the Fed is 100 guilders per dollar. If the demand for dollars temporarily decreases, to maintain the target exchange rate, the Fed can
A) sell dollars. B) buy dollars. C) increase U.S. exports. D) increase U.S. imports.
The short-run Phillips curve will shift if there is
A) a change in inflation expectations. B) an increase in inflation that is unanticipated. C) an increase in the unemployment rate. D) a decrease in inflation that is unanticipated.
Assume that the AD curve is held constant and short-run aggregate supply decreases. The result is a(n):
a. increase in both equilibrium real GDP and the price level. b. decrease in equilibrium real GDP and an increase in the price level. c. decrease in both equilibrium real GDP and the price level. d. decrease in equilibrium real GDP, while the price level remains fixed. e. increase in the price level, while equilibrium real GDP remains fixed.
The best example of a transfer payment would be ___.
A. govenment investment B. government purchases C. government giving funds to the unemployed D. the government paying its workers