According to some New Keynesian theories, one possible rationale for active policy making is
A) growing competition in U.S. product markets.
B) flexible prices.
C) sluggish adjustment of the price level in response to changes in aggregate demand
D) people are not rational and so do not react to incentives.
C
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Refer to Figure 13-11. What is the allocatively efficient output for the firm represented in the diagram?
A) Q1 units B) Q2 units C) Q3 units D) Q4 units
A freeze in Florida's orange growing regions will:
A) result in a sharp increase in the price of oranges in the short run because demand and supply are highly inelastic. B) result in a sharp increase in the price of oranges in the short run because demand and supply are highly elastic. C) result in a sharp decrease in the price of oranges in the short run because demand is highly inelastic and supply is highly elastic. D) result in little change in the price of oranges in the short run because supply is infinitely elastic.