Why does the Fed attempt to achieve a low, stable rate of inflation rather than an inflation rate of 0%?
What will be an ideal response?
With low and stable inflation, market prices efficiently allocate resources in the economy, so the economy is more productive and living standards are higher in the long run.
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A straight-line demand curve has the same elasticity throughout its length.
Answer the following statement true (T) or false (F)
The burden of a tax is
a. the amount of revenue that the government raises from the tax. b. what it would cost in alternative tax revenue to provide the same level of service. c. greater as the total revenue from the tax decreases. d. the amount the taxpayer would have to be given to be just as well off in the presence of the tax as in its absence.
In modern microeconomic theory, utility functions summarize:
A. cardinal information about preferences. B. ordinal information about preferences. C. absolute information about preferences. D. both cardinal and ordinal information about preferences.
Market failure: A case in which the __________ of govt intervention causes too much/not enough of a good to be produced at a ______ which is not ________________
Fill in the blank(s) with the appropriate word(s).