One criticism of monetary policy based on a predetermined steady growth rate in money supply is that
A) wages and prices are sufficiently flexible to allow the economy to restore the natural level of Real GDP on its own.
B) the total lag in monetary policy may be too long to allow for effective monetary policy.
C) changes in velocity, if not accounted for, can then be a source of price instability.
D) a and b
E) all of the above
C
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According to the Taylor rule, which of the following will lead to a higher nominal federal funds rate?
A) an increase in inflation B) a positive output gap C) a positive inflation gap D) all of the above E) none of the above
During a recession, government deficits can grow because:
A. government spending often increases as part of an expansionary fiscal policy. B. income tax revenues tend to decrease because people are earning less. C. sales tax revenues tend to decrease because people are spending less. D. All of these are true.
The market demand schedule in perfect competition is horizontal
a. True b. False Indicate whether the statement is true or false
The utilitarian justification for redistributing income is based on the assumption of diminishing marginal utility
a. True b. False Indicate whether the statement is true or false