Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004 . One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as
a. inflation targeting.
b. the monetary policy reaction lag.
c. the time inconsistency of policy.
d. the sacrifice ratio dilemma.
c
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If disposable income increases by $100 million, and consumption increases by $90 million, then the marginal propensity to consume is
If disposable income increases by $100 million, and consumption increases by $90 million, then the marginal propensity to consume is a. 0.9. b. 0.8. c. 0.75. d. 0.6.
"We lose more by letting the company fail than by having the government save it." This was most likely said by an economist who believes that
A) crowding out is complete. B) bailouts are sometimes necessary. C) the tax multiplier is larger than the government spending multiplier. D) the AS curve is vertical. E) the AS curve is upward-sloping.
According to the shortrun (specificfactors) model, how will FDI affect the return to capital and the return to land in the recipient nation?
a. The returns to land and capital will both decrease. b. The return to land will decrease; the return to capital will increase. c. The return to land will increase; the return to capital will decrease. d. The returns to land and capital will both increase.
Given percentage change in supply and the price elasticity of supply, percentage change in equilibrium price is zero if demand curve is perfectly inelastic
Answer the following statement true (T) or false (F)