Which of the following gives the Fed a credibility problem because the Fed may change its planned policies in light of new economic developments?
a. Adaptive expectations
b. Time inconsistency
c. Wage expectations
d. Disinflation
e. Rational expectations
b
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Suppose a year ago the exchange rate between Mexican pesos and dollars was 13.5 pesos per dollar, and that according to relative PPP the exchange rate was in equilibrium
Furthermore, assume that since then, Mexican inflation has been 12 percent while the U.S. inflation has been 3 percent. If according to relative PPP the peso is now said to be overvalued, what is a possible exchange rate consistent with this assertion? A) 13.5 pesos per dollar. B) 14.72 pesos per dollar. C) 15 pesos per dollar. D) 20 pesos per dollar.
In a typical cartel agreement, the cartel maximizes profit when it: a. behaves as a duopolist
b. is flexible in enforcing production targets. c. behaves as a monopolist. d. behaves as a perfectly competitive firm.
According to the quantity theory of money, if the quantity of goods and services doubles within the economy while velocity is constant and the money supply is cut in half, then the price level will be
a. unaffected b. four times higher c. times higher d. one-half its previous level e. one-fourth its previous level
Following the recession of 2001, there was a month in which employment and the unemployment rate both rose. Assuming the computations were correct, how is it possible for both to have increased?