A . Why is the Fed interested in controlling both the interest rate and the size of the money supply? b. In the grand scheme of things, does it really matter which target option the Fed chooses? That is, is there a preferred target option?
a . It wants to control growth of the money supply in order to maintain price level stability, and it wants to
control the interest rate to maintain spending at a full-employment, noninflationary level.
b. No, the Fed's countercyclical monetary policy works, whether it targets money supply or interest rates.
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When the natural unemployment rate ________, the short-run Phillips curve shifts ________ and the long-run Phillips curve shifts ________
A) increases; rightward; rightward B) increases; rightward; leftward C) decreases; rightward; rightward D) decreases; leftward; rightward E) increases; leftward; leftward
Third-degree price discrimination occurs when:
A) different groups of consumers are charged different prices. B) consumers are charged different prices at different points of time. C) consumers are charged different prices according to their willingness to pay. D) consumers are charged different prices based on the characteristics of their purchases.
Reductions in available resources will cause the production possibilities curve to:
a. expand. b. disappear. c. become vertical. d. shift inward.
A country has a population of 5 million. The labor force is 3.5 million, and the number of people not working but actively looking is 140,000. What is the unemployment rate?
a. 70% b. 140,000 c. 4% d. 2.8%