Which of the following statements has been proposed as a benefit of passive policymaking?
A. Passive policymaking does not wait for the time lag between recognition of a problem and policy action before engaging in economic policies to stabilize the economy.
B. Passive policymaking utilizes the rational expectations hypothesis.
C. When using passive policymaking there is no tradeoff between price stability and unemployment.
D. Passive policymaking allows for making immediate changes in response to an anticipated change in economic performance.
Answer: A
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Inflationary pressures caused the FOMC to increase the federal funds rate by ¼ of a percentage point in June 2004, and by exactly the same amount at every subsequent FOMC meeting through June of 2006. Theses actions
A) caused an upward movement along the monetary policy curve. B) caused a downward movement along the monetary policy curve. C) shifted the monetary policy curve upward. D) shifted the monetary policy curve downward.
Along a production possibilities curve that is concave to the origin, the opportunity cost of production of the good on the horizontal axis ____ as we move down along the curve
a. Decreases b. Increases c. remains constant d. first decreases, then increases
Exhibit 10-2 Labor and output data Labor Output 0 0 1 20 2 45 3 80 4 100 5 110 In Exhibit 10-2, if product price is fixed at $5, the MRP of the third worker is equal to:
A. $35. B. $125. C. $80. D. $175.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.