Describe two basic differences between the mainstream and monetarist economic theories.
What will be an ideal response?
Mainstream economists believe that the capitalist economy is inherently unstable due to price stickiness and shocks to either aggregate demand or aggregate supply, and that business cycle fluctuations could lead to periodic inflation or unemployment. As a result they support government intervention to assist in stabilizing the economy.
Monetarists believe that capitalist markets are highly competitive and that this competition makes the economy very stable. Prices and wages fluctuate to equilateral the economy at a level of full employment.
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According to economists, although a monopoly's price will be higher than a perfectly competitive firm's price when both produce the same good, the monopoly produces the good more efficiently
Indicate whether the statement is true or false
Iron is required to make steel. Hence, the price elasticity of demand for iron by steel manufacturers will be
A) unit elastic. B) inelastic. C) elastic. D) perfectly elastic.
The term "depository institution" refers to
A. credit unions only. B. commercial banks only. C. savings and loan associations only. D. commercial banks, credit unions, and savings and loan associations.
A demand curve is described as perfectly inelastic if
A. the same quantity is purchased regardless of price. B. the same price is charged regardless of quantity sold. C. neither price nor quantity demanded ever change. D. only quantity demanded can change.