From the mainstream perspective, instability in the economy is due to:
A. Price flexibility, and shocks to either aggregate demand or aggregate supply
B. Price stickiness, and shocks to either aggregate demand or aggregate supply
C. Price flexibility, and government policies and regulation
D. Price stickiness, and government policies and regulation
B. Price stickiness, and shocks to either aggregate demand or aggregate supply
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Contractionary policies are policies designed to
A) increase the level of real GDP. B) increase the federal deficit. C) reduce the level of real GDP. D) increase government spending.
The bond supply and demand framework is easier to use when analyzing the effects of changes in ________, while the liquidity preference framework provides a simpler analysis of the effects from changes in income,
the price level, and the supply of ________. A) expected inflation; bonds B) expected inflation; money C) government budget deficits; bonds D) government budget deficits; money
The quantity theory of inflation indicates that if the aggregate output is growing at 3% per year and the growth rate of money is 5%, then inflation is
A) 2%. B) 8%. C) -2%. D) 1.6%.
Why doesn’t a perfectly competitive firm charge a price slightly higher than the industry price in order to earn extra profit?
What will be an ideal response?