Economic theory
A. is a deliberate simplification of factual relationships.
B. seeks to disprove a hypothesis.
C. is based mainly on assumptions.
D. seeks to prove political ideals.
Answer: A
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Country X is the largest producer and exporter of oil in the world. Which of the following is likely to happen if the world demand for oil increases?
A) Country X's labor demand curve will shift to the right. B) Asset prices in Country X will fall. C) Country X's labor supply curve will shift to the left. D) Consumption expenditure in Country X will fall.
Sound economic policy is policy that is consistent with
a. good intentions. b. quick action and frequent policy changes until positive results are achieved. c. monetary stability, free trade, and low tax rates. d. saving jobs, protecting domestic industry, and increasing tax revenue.
Refer to Scenario 18.1. It would be acceptable to both parties to have the fishermen pay the factory
A) $0 to install a filter. B) $500 to install a filter. C) $4,000 to install a filter. D) $6,000 to install a filter. E) any amount greater than $4,000 and less than $6,000 to install the filter and make both parties better off.
According to the Taylor rule:
A. if real GDP rises by 2 percent above potential GDP, the Fed should raise the real federal funds rate by 1 percentage point. B. when real GDP is equal to potential GDP and inflation is equal to its target of 4 percent, the federal funds rate should be kept at 2 percent. C. if inflation falls by 1 percentage point below its target of 2 percent, then the Fed should raise the real federal funds rate by one-half a percentage point. D. all of these are appropriate Fed actions.