One way the government can boost the economy out of a recession is:
A. with public announcements telling the public to save their money.
B. by increasing government spending.
C. by setting price ceilings on most goods so people can afford them.
D. None of these will help an economy in recession.
Answer: B
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One of the implications of the kinked demand curve model is that even if a firm's costs change by a measurable amount, market price is unlikely to change. This helps explain the price rigidity observed in many oligopolistic markets
Indicate whether the statement is true or false
If a principal and agent have an efficient contract, then
A) one of them must be more risk-averse than the other. B) neither can be made better off without harming the other. C) they must have symmetric information. D) the principal bears more of the risk.