In the In the News article in the text titled "Fiscal Policy in the Great Depression," President Hoover's prescription in 1932 was for cutbacks in government spending and higher taxes. He was effectively
A. Applying the Keynesian prescription for handling a depression.
B. Decreasing the level of AD.
C. Targeting the goal of full employment rather than reduction of inflation.
D. Following the classical approach of laissez faire.
Answer: B
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One requirement for an industry to be perfectly competitive is that in the industry there
A) are a few firms who control the market. B) are many firms for whom the efficient scale of production is small. C) is one firm that sells a product with no close substitutes. D) are many firms selling different products. E) is a barrier to entry that makes the entry of new firms difficult.
Suppose you observe that output in an industry occurs on the inelastic part of the market demand curve. Which of the following can you conclude from this?
A. The industry is definitely behaving as a monopoly that is protected by barriers to entry. B. The industry is definitely not behaving as a monopoly that is protected by barriers to entry. C. The industry could be perfectly competitive. D. The industry is definitely not perfectly competitive. E. Both (a) and (d) F. Both (b) and (c) G. Both (b) and (d) H. None of the above
The kinked demand curve demonstrates that if an oligopolist raises its prices, it is likely to gain market share.
Answer the following statement true (T) or false (F)
In the event of excess supply in the coffee market:
A. the price of coffee will increase. B. the price of coffee will decrease. C. the supply of coffee will decrease (supply will shift to the left) to meet the demand. D. the demand for coffee will increase (demand will shift to the right) to meet the supply.