In which of the following ways is the private market sector similar to the public sector in terms of decision making?
A) Prices determine the demand for goods and services in each sector.
B) There is competition for scarce resource in both sectors.
C) Both sectors may use a type of "force" if necessary.
D) Votes by individual voters are basically equal in importance with dollars spent by individuals on goods.
Answer: B
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A vertical long-run aggregate-supply curve represents
a) both the classical dichotomy and monetary neutrality. b) the classical dichotomy but not monetary neutrality. c) neither the classical dichotomy nor monetary neutrality. d) monetary neutrality but not the classical dichotomy.
Gordon believes that the new Keynesian approach as opposed to other business cycle theories is preferred because
A) it explains information barriers and sticky wages. B) it explains how workers are "fooled." C) it explains wage and price stickiness assuming rational firms and workers. D) it identifies the source of supply side shocks and slow SAS adjustment.