To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to
a. collude with each other.
b. form various degrees of cartels.
c. compete rather than cooperate with each other.
d. cooperate rather than compete with each other.
c
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In the above figure, if the market was a single-price monopoly rather than perfectly competitive, which area shows the transfer of consumer surplus from consumers to producers?
A) A + B B) C + D C) C + D + E D) E + H
Using the aggregate expenditure-output model, assume the aggregate expenditures (AE) line is below the 45-degree line at full-employment GDP. This vertical distance is called a(n):
a. inflationary gap. b. recessionary gap. c. negative GDP gap. d. marginal propensity to consume gap.
Monetarists maintain that
a. the best way to study the economy is with the expenditure schedule. b. control over the money supply implies control over real GDP. c. velocity is not constant, but is fairly predictable. d. All of the above are correct.
John Maynard Keynes believed that the government should play a role in fighting both unemployment and inflation.
Answer the following statement true (T) or false (F)