Refer to Figure 26-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, the Federal Reserve would most likely
A) decrease interest rates. B) not change interest rates.
C) decrease the inflation rate. D) increase interest rates.
A
You might also like to view...
Refer to the table above. When the price is ________ and the quantity is ________, social surplus is maximized
A) $8; 5 units B) $6; 4 units C) $4; 4 units D) $2; 8 units
________ is the benefit that a consumer of a good or service receives
A) Marginal private benefit B) Marginal external benefit C) Marginal social benefit D) Both answers A and B are correct.
Using the Taylor rule, if the current inflation rate equals the target inflation rate and real GDP is greater than potential GDP, then the federal funds target rate ________ the sum of the current inflation rate plus the real equilibrium federal
funds rate. A) will be the same as B) will be less than C) will be greater than D) may be greater than or less than
For an efficient outcome, MR must exceed MC
a. True b. False Indicate whether the statement is true or false