The size of a deadweight loss in a market is reduced by
A) government legislating a ceiling price.
B) government legislating a price floor.
C) market price being close to marginal cost.
D) creative destruction.
Answer: C
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Suppose that the economy is producing below potential GDP and the Fed implements the correct change in monetary policy, but not until after the economy has passed the trough of the recession. Then
A) the Fed's contractionary policy may result in too large of a decrease in GDP. B) the Fed's contractionary policy may result in too small of a decrease in GDP. C) the Fed's expansionary policy may result in too small of a decrease in GDP. D) the Fed's expansionary policy may result in too large of an increase in GDP.
Which of the following is an accurate definition of a market?
a. a specific place where stocks are bought and sold b. a specific place where companies exchange goods c. a process of buyers and sellers exchanging goods and services d. a process of companies setting their preferred price