Explain the three desirable features of a good monetary policy instrument.
What will be an ideal response?
The desirable features of a policy instrument are (1) the instrument must be easily observable by everyone; (2) it must be controllable and quickly changed; and (3) it must be tightly linked to the policymakers' objectives. These features seem obvious. A policy tool wouldn't be very useful if you couldn't observe it, control it, or predict its impact on your objectives.
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Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in
What do you predict will happen to equilibrium price and quantity in the cell phone market? A) Price will decrease and quantity will increase. B) Price will increase and quantity will decrease. C) Both price and quantity will increase. D) Both price and quantity will decrease.
If we were to change the interpretation of the term "loanable funds" in such a way that government budget deficits would affect the demand for loanable funds, rather than the supply of loanable funds, then
a. crowding out would not be a consequence of an increase in the budget deficit. b. higher interest rates would not be a consequence of an increase in the budget deficit. c. an increase in the budget deficit would cause the demand for loanable funds to decrease. d. we would be making only a semantic change in how we analyze the effects of government budget deficits.
When the relative price of a good increases, consumers respond by buying
a. a larger quantity of that good and a larger quantity of substitutes for that good. b. a larger quantity of that good and a smaller quantity of substitutes for that good. c. a smaller quantity of that good and a larger quantity of substitutes for that good. d. a smaller quantity of that good and a smaller quantity of substitutes for that good.
Which of the following is the most likely reason the age-earnings profile is steeper for immigrants than it is for natives in the United States for ages 20 to 45?
A. Immigrants have less leverage in negotiating wage increases. B. Immigrants under the age of 45 must earn more money in order to pay for the legal expenses associated with becoming a citizen. C. The minimum wage does not apply to immigrants until they have resided in the United States for three years. D. Immigrants under the age of 45 tend to remit a large portion of their earnings to their relatives who did not immigrate. E. Immigrant wages increase rapidly when they first come to the United States and begin developing stronger English skills.