Which of the following is a characteristic of command economies?
A) Rewards to economic agents are based on market prices.
B) Coordination of economic agents is automatic.
C) It is difficult to incentivize economic agents.
D) The invisible hand functions without any restraint.
C
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Suppose the economy is self-regulating and the (actual) unemployment rate is less than the natural unemployment rate. This means that the economy is producing a level of output
A) above its natural level and will eventually cut back on output. B) below its natural level and will eventually increase output. C) below its natural level but no forces exist to automatically increase output. D) above its natural level and institutional constraints will automatically be reduced so as to allow the economy to continue producing this level. E) none of the above
Inflation
a. leads people to use more resources to reduce money holdings. There is no way it can make labor markets work more efficiently. b. leads people to use more resources to reduce money holdings. However, it can make labor markets work more efficiently. c. leads people to use fewer resources to reduce money holdings. There is no way it can make labor markets work more efficiently d. leads people to use fewer resources to reduce money holdings. However, it can make labor markets work more efficiently.