The most likely impact of an unanticipated increase in the money supply is
a. an increase in the real interest rate, which in turn stimulates investment and GDP.
b. a decrease in the real interest rate, which in turn stimulates investment and GDP.
c. a reduction in the general level of prices, which will increase the disposable income of households.
d. an improvement in technology, which will stimulate both output and employment.
B
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Rent control
a. is an example of a price ceiling. b. leads to a larger shortage of apartments in the long run than in the short run. c. leads to lower rents and, in the long run, to lower-quality housing. d. All of the above are correct.
The term prisoners' dilemma
a. refers only to situations where prisoners' must confess on one another. b. is in agreement with Adam Smith's invisible hand idea. c. represents situations where people do not act in their own self interest. d. can be applied to show why cartels are difficult to maintain.