A contractionary monetary policy can reduce real GDP if expectations are formed rationally and monetary policy is
A) combined with expansionary fiscal policy.
B) carried out in total secrecy.
C) publicly announced and credible.
D) combined with contractionary fiscal policy.
B
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The chair of the Department of Economics at Colorado State University decided that office space is for tenured faculty and that graduate students are required to share cubicles. What method is used to allocate office space?
A) lottery B) majority rule C) command D) first-come, first-served E) sharing equally
Accountants consider depreciation allowance as ________ and ________ it from the firm's operating profit before calculating the tax.
A) profit; add B) a cost; subtract C) profit; subtract D) a cost; add
According to mainstream economists, the Fed's adherence to a traditional monetary rule rather than to discretionary monetary policy is likely to:
A. reduce the severity of business cycles. B. increase the amount of instability in the economy. C. increase the rate of inflation. D. crowd out much-needed investment spending during times of rapid inflation.
Assume Robbie's Robots operates in a perfectly competitive market producing 3,000 robots per day. At this output level, the selling price is $800 per robot and the marginal cost is $825 per robot. To maximize profits, Robbie's Robots should
A. make no adjustments as they are already maximizing their profits. B. increase their output. C. decrease their output. D. stop producing since it is earning a loss.