If full employment GDP is $1 trillion greater than the equilibrium GDP and the multiplier is 5, how much is the deflationary gap?
What will be an ideal response?
1000/5 = $200 billion
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The Federal Reserve can influence the exchange rate by
A) changing interest rates. B) buying or selling dollars. C) Both answers A and B are correct. D) None of the above answers is correct.
If government regulators want a natural monopolist to earn only zero economic profit, they will set price equal to:
A. average total cost (ATC). B. marginal cost (MC). C. average fixed cost (AFC). D. average variable cost (AVC).
The notion that the central bank should set its federal funds target by a formula that puts weight on both output and inflation gaps is known as ________
A) the Taylor rule B) the constant growth rate rule for money C) the equation of exchange D) the Lucas rule
An decrease in the velocity of money will shift the
a. IS curve up. b. LM curve up. c. LM curve down. d. IS curve down.