If prices are held above the equilibrium price:
A) social surplus is maximized.
B) all firms incur losses.
C) there exists a surplus in the market.
D) there exists a shortage in the market.
Question 2
If recessions are in large part the consequence of coordination failures,
A) government must direct or control private spending to reduce instability.
B) stability cannot be achieved without the use of discretionary fiscal policy.
C) stability cannot be achieved without the use of discretionary monetary policy.
D) the economy is unlikely to respond smoothly and predictably to shifts in government policy.
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