Use the following graphs to answer the next question.
In the graphs, the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve, respectively. All numbers are in billions of dollars. The interest rate and the level of investment spending in the economy are at point B on the investment demand curve. To achieve the long-run goal of a noninflationary, full-employment output of Qf in the economy, the Fed should ________.
A. increase investment spending from $30 billion to $60 billion
B. decrease the interest rate from 8% to 6%
C. decrease the interest rate from 10% to 8%
D. decrease the interest rate from 6% to 4%
Answer: B
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The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:
A. the league imposes harsh penalties for steroid use. B. baseball diamonds have become larger. C. the average quality of batters has fallen. D. specialization by pitchers, infielders, and outfielders has made it harder for batters to hit.
When economists speak of full employment, they refer to the case in which the sum of frictional and structural unemployment is
A) falling over time. B) equal to zero. C) equal to the actual amount of unemployment. D) greater than the level of deficient demand unemployment.
The law of supply states that:
a. there is a negative relationship between the price of a good and the quantity of it purchased by suppliers. b. there is a positive relationship between the price of a good and the quantity that buyers choose to purchase. c. there is a positive relationship between the price of a good and the quantity of it offered for sale by suppliers. d. at a lower price, a greater quantity will be supplied.
A payoff matrix shows:
A. the demand curve facing a firm when there are only two firms. B. the payoff to being a perfectly competitive firm. C. the payoffs for each possible combination of strategies. D. the payoff to being a monopolist.