What is the theory of bureaucratic behavior and how can it be used to explain the behavior of the Federal Reserve?
What will be an ideal response?
The theory of bureaucratic behavior concludes that the main objective of any bureaucracy is to maximize its own welfare, which is related to power and prestige. This can explain why the Federal Reserve has defended its autonomy, avoids conflict with Congress and the president, and its push to gain more control over banks.
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If the government imposed a price ceiling on gasoline above this good's current market clearing price, there would be
A) a shortage of gasoline. at the ceiling price. B) a surplus of gasoline at the ceiling price. C) an increase in the price of gasoline. D) no change in the price of gasoline.
When a second firm enters a monopolist's market:
A. the former monopolist's average cost decreases as its output level decreases. B. the demand curve facing the former monopolist shifts to the right. C. the market price falls. D. None of these