Prices that adjust slowly to their long-run equilibrium ________
A) help the economy to avoid economic fluctuations
B) call for policies that focus on short-run fluctuations
C) are conducive to maintaining low inflation
D) all of the above
E) none of the above
B
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Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?
a. GDP would definitely increase, despite the fact that GDP includes leisure. b. GDP would definitely increase because GDP excludes leisure. c. GDP could either increase or decrease because GDP includes leisure. d. GDP could either increase or decrease because GDP excludes leisure.
Rent controls often have adverse effects, including
A) too much housing in a community. B) deterioration in the quality of existing rental units. C) too much construction of new rental units in the community. D) income transfers from the poor to landlords.