What have been the changes or modifications in thinking about monetary rules in recent decades?
What will be an ideal response?
Milton Friedman proposed a strict monetary rule to guide Federal Reserve policy. He proposed that the Fed should increase the money supply each year at the same annual rate as the typical growth of the economy’s productive capacity. In recent decades, there has been a change of interest in such a strict rule. There has been more interest in inflation targeting. Such a policy would call for the Fed to focus on price level stability as its sole objective, state inflation targets, and enact policies to achieve them. If the targets were missed there would be open reporting and accountability for the outcome.
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Symmetry of net substitution effects is one of the principal conclusions of the theory of utility maximization. Which two mathematical theorems are used to prove this symmetry?
a. Taylor's Theorem and Fundamental Theorem of Calculus b. Cauchy's Theorem and DeMoivre's Theorem c. Lagrangian Theorem and Fundamental Theorem of Calculus d. Envelope Theorem and Young's Theorem
One barrier to entry into a monopoly market is:
A. few buyers. B. high input costs. C. the ownership of a key resource or input. D. too many competitors already in the market.
Corey is having difficulty deciding between two dishwashers, A and B. As shown in the accompanying diagram, A makes more noise than B, but is cheaper. Ideally, Corey would like a dishwasher that is both quiet and inexpensive.
If Corey behaves like most decision-makers, then the addition of option C would:
A. increase his likelihood of picking B. B. decrease his likelihood of buying a dishwasher. C. increase his likelihood of picking A. D. have no impact on his choice of A and B.
This graph shows elasticity of demand because the distance between Q1 and Q2 is ______ the distance between P1 and P2.
a. greater than
b. less than
c. the same as
d. irrelevant to