Explain why the Fed does not consider zero unemployment as a desirable goal
What will be an ideal response?
If the unemployment rate was zero, cyclical unemployment would have to be negative and real GDP would greatly exceed potential GDP. When real GDP exceeds potential GDP, the inflation rate increases, which is not compatible with the Fed's goal of price stability.
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According to this Application, other economists disagree with Professor Gordon and suggest that the ________ will help to increase future growth
A) global interconnectedness B) the Internet C) computer technology D) all of the above
Maurice Allais, Reinhard Selten, and Vernon Smith all were awarded the Nobel Prize in Economics in part because
A) they proved that external economies would lead to market failure. B) of their work on the substitution and income effects of price changes. C) of their work with experimental economics. D) they discovered the first example of a Giffen good.
"Mediocre economists often consider only the immediate direct effects of a change, whereas a good economist will also consider indirect effects that may only become observable over time." This statement most clearly emphasizes
What will be an ideal response?
Supply-side tax cuts are likely to widen income inequalities.
Answer the following statement true (T) or false (F)