The rationing mechanisms that develop under binding price ceilings are usually inefficient
a. True
b. False
Indicate whether the statement is true or false
True
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In the Cobb-Douglas production function Y = AK3/4L1/4,
A) capital is a more expensive input than labor. B) capital is more plentiful than labor. C) diminishing returns to capital are three times greater than are diminishing returns to labor. D) capital has a larger share in national income than does labor.
Believers in fixed rules maintain that
a. with accurate forecasts, we can see inflation coming at least one year ahead of time. b. the length of stabilization lags is not important because fiscal policy actions are taken quickly and the economy feels the effect on aggregate demand quickly. c. we should forget about discretionary policy and put the economy on autopilot, relying instead on automatic stabilizers and the economy's self-correcting mechanism. d. the economy's self-correcting mechanism is slow and not very reliable, even with automatic stabilizers.
Other things the same, if the exchange rate changes from 6 Chinese yuan per dollar to 7 Chinese yuan per dollar, then the dollar
a. appreciates and buys more Chinese goods. b. appreciates and buys fewer Chinese goods. c. depreciates and buys more Chinese goods. d. depreciates and buys fewer Chinese goods.
If the absolute price elasticity of demand for movie tickets is 0.75, an increase in ticket prices will
A. increase total revenue. B. not change total revenue. C. not change the elasticity of demand. D. decrease total revenue.