Which of the following summarizes the limitations of monetary policy?
A. The Fed is most effective at influencing long-term interest rates but is unable to have a short-run impact on the economy.
B. The Fed directly sets all interest rates, but no interest rate has any short-run effect on the economy.
C. The Fed can directly influence many different interest rates, but it can only influence them a little bit.
D. The Fed has a lot of control over just one interest rate, and interest rates influence economic activity in the short run only.
Ans: D. The Fed has a lot of control over just one interest rate, and interest rates influence economic activity in the short run only.
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If a firm's total revenue just covers its implicit and explicit costs of production, then
A. the economic cost of production exceeds total revenue. B. accounting profit is zero. C. economic profit is zero. D. total revenue exceeds the economic cost of production.
Sjen Mavago, the economics minister of the country of X-Marks-the-Spot, has concluded that entrepreneurs are unable to generate the kind of growth the country needs. Her decision to create state enterprises might be motivated by the desire to
a. earn profit b. provide jobs for friends and relatives of government officials c. take risks d. encourage a free market e. limit government's role in the economy
A situation in which output decreases while prices increase is often referred to as:
A. inflation. B. negative economic growth. C. a recession. D. stagflation.
If two variables are inversely related, then as the value of one variable:
A. increases, the value of the other may either increase or decrease. B. decreases, the value of the other decreases. C. increases, the value of the other decreases. D. increases, the value of the other increases.