Exhibit 6A-1 Budget line
?
?As shown in Exhibit 6A-1, a leftward shift in the budget line from CD to AB would result from:
A. ?a price reduction in good X.
B. ?a price reduction in good Y.
C. ?a decrease in consumer income.
D. ?an increase in consumer income.
Answer: C
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The natural rate of unemployment:
A) is a constant. B) is the average of the unemployment rate in a country over time. C) is determined by adding the unemployment rates in all countries and then dividing it by the number of countries. D) is always lesser than the level of cyclical unemployment in an economy.
From the classical perspective, a decrease in output during a recession is a result of
A) firms voluntarily supplying fewer goods and services in the marketplace. B) a greater quantity of goods and services supplied than is the quantity demanded for these goods and services. C) the decrease in the overall level of production due to those firms which were forced to shut down. D) the decline in availability of factors of production which naturally occurs at the onset of a recession.
If the inflation rate target is 2%, the current inflation rate is 1%, and the output gap is minus 2%, then according to the Taylor rule, the nominal federal funds rate should be ________ percent
A) zero B) two C) four D) three E) none of the above
The cost of capital can be thought of as the rate of return required by investors in the firm's securities
a. true b. false