The marginal rate of substitution between goods A and B measures the price of A relative to the price of B
a. True
b. False
Indicate whether the statement is true or false
False
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Under fiscal stabilization policy in the New Keynesian model, after a negative shock to output,
A) the government increases expenditures and the central bank increases the money supply. B) the government increases expenditures and the central bank decreases the money supply. C) the government decreases expenditures and the central bank increases the money supply. D) the government decreases expenditures and the central bank decreases the money supply.
Taxation allows the government to redistribute income from higher income earners to those with lower incomes
Indicate whether the statement is true or false
The monopolist chooses to produce:
A. at a higher quantity than the perfectly competitive firm. B. where marginal cost equals marginal revenue. C. at an efficient outcome. D. at a cost that is equal to a competitive one.
The assumption that firms meet the demand for their products at preset prices is the key assumption upon which ________ is built.
A. Okun's Law B. the supply and demand model C. quantity equation for money D. the basic Keynesian model