Firms believe that the current economic downturn will be long-lasting and have decided to hold very little excess labor. The government reports that the unemployment rate is 12.5%. The government has decided to stimulate the economy by increasing government spending. In this situation the multiplier is likely to be
A. zero.
B. small.
C. negative.
D. large.
Answer: D
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Firms are not likely to include their sunk costs when calculating their true cost of supplying goods if they
A) are calculating their income for tax purposes. B) have been accused by competitors of "dumping." C) have been accused by customers of "price gouging." D) must request price increases from a regulatory commission. E) want subsidies from the government.
Monetarists believe in all of the following except
a. steady growth in inflation will yield stable output. b. steady growth in the money supply will yield stable output. c. fluctuations in the money supply are responsible for business cycles. d. the Fed should not be involved in trying to stabilize the economy.
The "New Deal" programs of the 1930s aimed at
(a) transforming American capitalism into a planned socialist economy. (b) introducing short-term measures to cure the depression but no fundamental changes in the American economy. (c) introducing measures to deal with the crises and cure the depression combined with measures to restructure important aspects of the economy and increase the role of government in it. (d) reintroducing laissez-faire policies (non-government intervention) like those that had worked in the 19th century.
Which of the following is concerned primarily with price discrimination?
a. The Sherman Antitrust Act. b. The Clayton Act. c. The Robinson-Patman Act. d. The Celler-Kefauver Act.