When the production possibilities curve is a straight line, the opportunity cost of producing more of one good must be equal to the opportunity costs of producing more of the other good
Indicate whether the statement is true or false
F
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The distributed lag model is given by
A) Yt = ?0 + ?1Xt + ?2Yt-1 + ut. B) Yt = ?0 + ?1Yt-1 + ?2Yt-2 + ... + ?rYt-r + ut. C) Yt = ?0 + ?1ut + ?2ut+1 + ?3ut+2 + ... + ?r+1ut+r + et. D) Yt = ?0 + ?1Xt + ?2Xt-1 + ?3Xt-2 + ... + ?r+1Xt-r + ut.
Raising the discount rate is: a. an expansionary policy because it raises the ratio of excess to total reserves in the banking system
b. a contractionary policy on the part of the member banks of the Fed because it raises the firms' costs of borrowing from them. c. a contractionary policy on the part of the Fed because it raises the commercial banks' cost of borrowing from it. d. an expansionary policy on the part of the member banks of the Fed because it raises their profits relative to those of the nonmember banks. e. an expansionary policy on the part of the Fed because increasing the interest rates that the banks are allowed to charge will increase their willingness to make loans.
Use of real GDP to measure changes in national output from one period to another can be misleading if
a. the price level is different for the two periods. b. the share of production carried out in the nonmarket sector is different for the two periods. c. the bundle of goods produced during the periods is quite similar. d. the size of the export-import sector differs for the two periods.
If the percentage change in the price of a good is less than the resulting percentage change in the quantity demanded of that good, then the demand for that good is:
A. unit elastic. B. inelastic. C. elastic. D. perfectly inelastic.