The Federal Reserve kept interest rates low from 2002 through 2016 because they:
A. wanted to follow the Taylor Rule.
B. were worried about inflation creeping into the economy.
C. wanted to reduce the value of the dollar and help domestic exporters.
D. wanted to avoid deflation and the resulting recession.
Answer: D
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Suppose that inventories were $80 billion in 2012 and $70 billion in 2013. In 2013, national income accountants would ________.
A. subtract $75 billion (= $150/2) from other elements of investment in calculating total investment B. add $10 billion to other elements of investment in calculating total investment C. add $75 billion (= $150/2) to other elements of investment in calculating total investment D. subtract $10 billion from other elements of investment in calculating total investment
The efficient transfer price is
a. the upstream division's average cost b. the upstream division's marginal cost c. the downstream division's average cost d. the downstream division's marginal cost
In a market that lacks sufficient competition,
a. output will generally be less than the output that is ideal from the standpoint of economic efficiency. b. output will generally be greater than the output that is ideal from the standpoint of economic efficiency. c. price will generally be less than the price that would result if the market was competitive. d. profit rates will generally be so low that government subsidies will be necessary to ensure that the firms remain in business.
Suppose a firm's production function is given by Q = F(L, K) = 5LK, where L is the amount of labor and K is the amount of capital. The wage rate is $100 per unit of labor and the rental rate of capital is $50 per unit of capital. a. What is the least-cost combination of capital and labor if the firm produces 1000 units of output? b. What is the firm's long run cost function? c. If the firm currently uses 10 units of capital, what is its short-run cost function?
What will be an ideal response?