The allocative function of price is to:
A. direct resources away from markets that are overcrowded and toward markets that are underserved.
B. provide subsidies to low-income families so they can purchase essential goods and services.
C. ensure that firms in perfectly competitive markets earn an economic profit.
D. distribute scarce goods and services to those consumers who value them the most highly.
Answer: A
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The notion that expectations will be identical to optimal forecasts using all available information is known as ________
A) adaptive expectations B) irrational expectations C) rational expectations D) tertiary expectations
Which of the following would cause the money supply in the United States to expand?
a. A decrease in reserve requirements. b. An increase in the discount rate. c. The sale of U.S. government bonds by a Federal Reserve bank. d. An increase in the world supply of gold.
A decrease in the price level will
a. have no effect on aggregate demand b. decrease aggregate demand c. decrease aggregate expenditure d. decrease the equilibrium level of national income e. increase the equilibrium level of national income
"Rationing" scarce goods by a rule that encourages our willingness to pay the monetary price
What will be an ideal response?