Why is the credibility of the Fed's policy announcements particularly important?
What will be an ideal response?
The credibility of policy announcements is important for the effectiveness of monetary policy because a more credible policy allows the Fed to have a greater impact on the expected inflation rate. In particular, a credible policy of disinflation will cause the short-run Phillips curve to shift down more rapidly than if the policy is less credible, thereby making the increase in the unemployment rate smaller and briefer.
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If the price of a U.S. government bond is? $50 and the owner of the bond is entitled to? $2.50 income each? year, then the interest rate on the bond is? ______.
Dalton, Georgia, a town with a population less than 35,000, has developed into a leading producer of carpets, despite its small size
Some government officials argue that the success achieved by firms in Dalton in developing a comparative advantage in carpet making because of external economies can be used to justify trade barriers as a means to protect an "infant industry." After an infant industry gains experience it can compete in international markets and the trade barriers can be removed. What objections do economists make to this argument in favor of trade barriers?
The situation in which a firm charges different prices for different blocks of output is referred to as:
A) first-degree price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) fourth-degree price discrimination.
The more good substitutes there are for a product, the more likely it is that the total revenue for the good in question would increase as a result of an increase in price
a. True b. False Indicate whether the statement is true or false