To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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When the Fed buys government bonds on the open market,
A. the market rate of interest on government bonds are lowered AND the market rate of interest on corporate bonds are lowered. B. the market rate of interest on corporate bonds are increased. C. government yields drop but corporate yields rise. D. government and corporate yields rise.
The securities, such as stocks or bonds, constitutes a(n) ________ for the borrowers and a (n) ________ for the saver
A) asset; liability B) asset; debt C) liability; asset D) debt or an asset; liability or an asset
Carefully explain the difference between forecasting variables separately versus forecasting a vector of time series variables. Mention how you choose optimal lag lengths in each case
Part of your essay should deal with multiperiod forecasts and different methods that can be used in that situation. Finally address the difference between VARS and VECM. What will be an ideal response?
In the long run, a monopolistically competitive firm will:
a. produce more than a perfectly competitive firm. b. suffer an economic loss. c. earn positive economic profit. d. produce less than a perfectly competitive firm.