Do you think that prices are more or less sticky today than 50 years ago? Why?
What will be an ideal response?
Less sticky. Information technology and rapid introduction of competing substitutes for goods and services enables consumers to be more price sensitive and for producers to avoid/mitigate menu costs. Workers, too, are more price sensitive and accepting of labor market flexibility. The logic of staggered price setting still applies, but rapid and deep common knowledge of market conditions enables some de facto synchronization of pricing decisions.
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Refer to Figure 22-4. Which of the following combinations of points illustrates changes in the Soviet Union's economy from 1950 to 1980?
A) B to D B) E to B C) B to E D) A to B to C
Which statement is true?
A. In China today, the private sector produces no more than 10% of the country's goods and services. B. Under communism in the Soviet Union, the private sector was almost as large as the government sector. C. In the American economy today, the public sector is almost as large as the private sector. D. None of the statements are true.
Banks help savers find productive uses for their funds because banks are specialized in:
A. gathering information about and evaluating potential borrowers. B. securing government guarantees for loans. C. evaluating the riskiness of stocks. D. obtaining preferential tax treatment for savers.
The quantity of loanable funds available to a corporation depends on the
A. Price of its stock. B. Interest rate the company is willing to offer. C. Present worth of the company's dividends. D. Dividends the company is willing to pay.