What typically happens to the inflation rate when unemployment falls to very low levels?
(A) It will rise or fall but not with the unemployment rate.
(B) It falls.
(C) It stays the same.
(D) It rises.
Ans: (D) It rises.
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The Clayton Act is an antitrust law that was passed to
A) outlaw monopolization. B) prohibit charging buyers different prices if the result would reduce competition. C) address loopholes in the Sherman Act. D) toughen restrictions on mergers by prohibiting mergers that reduce competition.
Which of the following bonds (of equal maturity) would have the lowest risk premium?
A) U.S. government bonds B) German government bonds C) the bonds of a financially stable corporation, like IBM D) Bonds rated Aaa by Moody's E) junk bonds
The Federal Reserve plays a larger role than Congress and the president in stabilizing the economy because
A) the Federal Reserve can more quickly change monetary policy than the president and the Congress can change fiscal policy. B) the Federal Reserve can immediately recognize when real GDP is below or above potential GDP. C) changes in interest rates have a considerably larger effect on the economy than changes in government purchases or taxes. D) changes in interest rates have their full effect on the economy in a short period of time, whereas changes in government spending and taxes have their full effect over a long period of time.
Refer to the information provided in Table 8.1 below to answer the question(s) that follow.
Table 8.1 
Refer to Table 8.1. Assume the price of labor (L) is $5 per unit, the price of capital (K) is $10 per unit, and that firms attempt to minimize costs. The total variable cost of producing one unit of output is
A. $16. B. $100. C. $120. D. $220.