Refer to Table 15-4. Suppose the following table illustrates the values of real and potential GDP and the price level if the Fed does not vote to change their current policy to be more contractionary or expansionary
If the Fed wants to keep real GDP at its potential level in 2017, should the Fed use a contractionary or expansionary policy? How should it conduct open market operations to achieve its goal?
The information in the table indicates that if the Fed does not vote to change their current policy to be more contractionary or expansionary, then real GDP will fall below potential GDP in 2017. To keep the economy at potential GDP in 2017, the Fed should use expansionary monetary policy. This would mean that the Fed should direct the trading desk to buy U.S. Treasury bills. If this is done, reserves in the banking system will increase, banks can increase the number of loans, and this should raise the money supply and lower the interest rate.
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Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Suppose Country B decides to specialize in tomatoes, and Country A specializes in bananas. What terms of trade would both countries agree to? One tomato for:
A. one banana B. two bananas C. four bananas D. six bananas
Bill is an accountant for a small machine shop. His boss has asked him to calculate the shop's total fixed cost. Which method will give Bill the correct answer?
a. subtracting marginal cost from total cost b. calculating the product of average total cost and quantity c. determining what the shop would pay for if they produced zero output d. adding the total variable cost to the total cost e. subtracting total variable cost from total revenue
The government of country A, which has adopted American GDP accounting conventions, has calculated that the seasonally-adjusted market value of all final goods and services produced within country A in quarter 1 was $5 billion. The government will report that GDP in quarter 1 was
a. $1.25 billion at an annual rate. b. $4 billion at an annual rate. c. $5 billion at an annual rate. d. $20 billion at an annual rate.
If the law of diminishing marginal productivity holds true, eventually both the marginal cost curve and the average cost curve must become:
A. downward sloping. B. horizontal lines. C. upward sloping. D. vertical lines.