Obstacles in achieving efficiency in a market include
A) public goods.
B) the presence of an external cost or benefit.
C) competition.
D) Both answers A and C are correct.
E) Both answers A and B are correct.
E
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If the nominal interest rate on a one-year loan was 7%, the expected inflation rate over the year was 3% and the actual inflation rate over the year turned out to be 3.5%, then the expected real interest rate equals
A) 6.5%. B) 4.0%. C) 3.75%. D) 3.5%.
If Greg uses a special glue to make model planes that he sells and the price of his model planes increases, then one would expect that the equilibrium price of the special glue would _______ and the equilibrium quantity would _________
a. increase; decrease b. decrease; increase c. increase; increase d. decrease; decrease e. increase; indeterminant
We use the term expansionary fiscal policy when the overall effect of decisions about taxation and spending is to:
A. increase aggregate demand. B. decrease aggregate supply. C. increase aggregate supply. D. decrease aggregate demand.
Which of the following statements is TRUE?
A) The long-run aggregate supply curve is vertical. B) The short-run aggregate supply curve is vertical. C) The long-run aggregate demand curve is upward sloping. D) The long-run aggregate supply curve is upward sloping.