Shortages occur at prices which are above the market clearing price
Indicate whether the statement is true or false
FALSE
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Under adaptive expectations, the short-term effect of an unanticipated shift to a more expansionary macroeconomic policy will be a:
a. temporary reduction in the unemployment rate. b. permanent reduction in the unemployment rate. c. temporary reduction in the inflation rate. d. permanent reduction in the inflation rate.
Markets and Ocean Fisheries
- In the absence of government regulation, do individuals possess property rights to fish in the ocean?
- Why are many ocean fisheries experiencing significant declines in the harvest of fish? Is this problem related to the existence of property rights?
- Why would a quota on the total catch in a fishery or shortened fishing seasons lead to too much investment in capital and an inefficient use of resources?
- Would the use of individual transferable permits result in a more efficient outcome? Explain.
- No individuals possess property rights to fish in the ocean.
- The significant declines in fish harvests are the result of increasing demand for fish, more effective technologies for catching fish, and the absence of property rights. Each individual receives all of the benefits from catching additional fish, but the cost of a depleted breeding stock is shared by all participants in the fishery.
- If there is a quota on the total catch in a fishery or a shortened season, each individual fisherman has an incentive to catch as many fish as possible in a very limited time. This encourages excessive investment in boats, nets, etc. The same total number of fish would be caught over a longer period of time at a lower cost per fish if neither of these restrictions were in place.
- With individual transferable permits, each fisherman would be able to catch a particular quantity of fish, no matter how long they spend fishing. This would provide for more effective control over the total harvest than under a fishing season of limited duration and would also provide no incentive to invest in too much capital. The sale of fishing permits would result in the most fishing being done by those who have the lowest cost of fishing.
All other things unchanged, the velocity of money will _______ if the quantity of money demanded _______.
A. decrease; decreases B. increase; increases C. increase; decreases D. fall to zero; increases
Which of the following statements is CORRECT?
a) actual aggregate expenditures does not always equal real GDP b) planned investment exceeds actual investment when real GDP is greater than aggregate planned expenditures c) actual investment exceeds planned investment when real GDP is less than aggregate planned expenditures d) none of the above is correct