Why is persistent unemployment a possibility in the Keynesian model but NOT in the classical model?
A. The Keynesian model assumes that nominal wages are inflexible downward.
B. The Keynesian model assumes that people work for motives other than those of earning an income for themselves and supporting a family.
C. The Keynesian model assumes that workers can lose their jobs to foreign competition during economic downturns.
D. The Keynesian model assumes that the level of real GDP is inflexible.
Answer: A
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When government imposes a price ceiling or a price floor on a market,
a. price no longer serves as a rationing device. b. efficiency in the market is enhanced. c. shortages and surpluses are eliminated. d. both buyers and sellers become better off.
A tariff is
a. a penalty imposed on importers of capital b. a tax on financial transactions c. the result of a treaty d. a tax on either imports or exports e. an agreement between countries to limit trade