Effectively managing aggregate demand in order to stabilize nominal GDP requires
A) policy makers to know the size of the gap between current demand and demand at equilibrium.
B) only that policy makers know what level of aggregate demand is necessary for full employment.
C) successful economic forecasting.
D) that nominal GDP be the same as real GDP.
E) very little information about the economy because the market system is an efficient generator of high-quality information.
C
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Leonard, Sheldon, Raj, and Penny each like science fiction moves. The price of a special boxed set of Star Trek DVDs is $50 . Leonard values the set of movies at $70, Sheldon at $65, Raj at $60, and Penny at $55 . Suppose that if the government taxes DVDs at $10 each, the price rises to $60 . A consequence of the tax is that consumer surplus shrinks by
a. $50 and tax revenues increase by $30, so there is a deadweight loss of $20. b. $35 and tax revenues increase by $30, so there is a deadweight loss of $5. c. $20 and tax revenues increase by $20, so there is no deadweight loss. d. $15 and tax revenues increase by $20, so there is no deadweight loss.
A monopsonistic employer:
A. has a perfectly elastic labor supply curve. B. is necessarily a monopolist in the product market. C. confronts a marginal resource (labor) cost that is greater than the wage rate. D. confronts a marginal resource (labor) cost that is less than the wage rate.