Happy Cows is a perfectly competitive dairy farm with a 50 percent chance of a high demand of $5 and a 50 percent chance of a low demand of $4. Free Cows is a perfectly competitive dairy farm with a 50 percent chance of a high demand of $6 and a 50 percent chance of a low demand of $3. Which of the following statements is true?
A) All else equal, neither Free Cows nor Happy Cows can benefit from an accurate forecast.
B) All else equal, an accurate forecast is more valuable to Happy Cows than Free Cows.
C) All else equal, an accurate forecast has the same value to both Free Cows and Happy Cows.
D) All else equal, an accurate forecast is more valuable to Free Cows than Happy Cows.
D) All else equal, an accurate forecast is more valuable to Free Cows than Happy Cows.
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Most American workers
A. are employed in the goods-producing sector. B. are employed by government. C. are employed in the service-producing sector. D. are employed in the agricultural sector.
According to the Taylor rule, when inflation and/or output is above its target, then:
a. the federal funds rate must be negative. b. the federal funds rate must be above its target. c. the federal funds rate must be above inflation. d. none of the above are correct.
Which of the following statements is (are) correct? The Federal Reserve
a. can, over the long run, roughly control the money supply by changing the monetary base to offset any undesirable changes in the money stock as a result of changes in currency holdings or excess reserve holdings. b. controls the money supply better in the long-run because of short-run uncertainty regarding the money multiplier. c. is in absolute control of the money stock at all times. d. Both a and b
When crowding out occurs, higher government spending results in higher interest rates, which in turn results in:
a. higher inflation. b. less consumption and investment. c. a larger debt ceiling. d. more tax revenues.