The effects of a price change are always understated by a partial-equilibrium analysis when compared to a general-equilibrium analysis
Indicate whether the statement is true or false
False. If the price change affects other markets, the partial-equilibrium analysis will be different than the general-equilibrium. However, the results may be smaller or larger under either analysis.
You might also like to view...
Which of the following accurately describes condemnation by right of eminent domain?
(a) It involves the redistribution of property first owned by the government to private businesses. (b) It was never exercised for such private purposes as acquiring land for canal or railroad construction during the antebellum period. (c) The benefits can be diverse and the costs can be concentrated. (d) It was never exercised by the federal government before the 1870s.
A banking panic is an episode in which:
A. depositors, afraid of increasing interest rates, attempt to engage in discount-window borrowing at the Federal Reserve. B. depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system. C. commercial banks, concerned about high interest rates, rush to borrow at the Federal Reserve discount rate. D. commercial banks, fearing Federal Reserve sanctions, unwillingly participate in open-market operations.