Economist Douglass North's definition of institutions:
A. includes laws enforced by the government as well as cultural norms.
B. is the humanly devised constraints that shape human interactions.
C. is the rules of the game in a society.
D. All of these statements are true.
Answer: D
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Rational expectations are the theory according to which people optimally use all the information they have, including information about government policies, when forecasting the future.
Answer the following statement true (T) or false (F)
Which of the following dampens the effect on GDP of a change in government spending?
a. The money supply changes when real income changes. b. Taxes change when government spending changes. c. Money demand changes when real income changes. d. People do not expect much from the government. e. Aggregate spending does not respond to changes in the interest rate.
The joining of a firm with another to which it sells an output or from which it buys an input is known as
A. economies to scale. B. a conglomerate merger. C. a horizontal merger. D. a vertical merger.
A deadweight loss results from the imposition of a tax on a good because the tax
a. induces the government to increase its expenditures. b. reduces the quantity of exchanges between buyers and sellers. c. causes a disequilibrium in the market. d. imposes a loss on buyers that is greater than the loss to sellers.