When the rate of interest (or price of capital) increases, the
a. quantity demanded of loanable funds by the firm will decrease
b. quantity demanded of loanable funds by the firm will increase
c. firm's MRP of capital increases
d. firm's MPP of capital increases
e. firm's MRP of capital decreases
A
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According to the Taylor rule, the Fed should set the target for the federal funds rate equal to the sum of the equilibrium real federal funds rate, the current inflation rate, one-half times the ________, and one-half times the ________
A) interest rate gap; inflation gap B) inflation gap; output gap C) interest rate gap; output gap D) unemployment gap; government-spending gap
A perfectly elastic demand curve is vertical
a. True b. False Indicate whether the statement is true or false
After an extended period of steady inflation at a constant rate,
a. people will anticipate inflation. b. actual unemployment will approximate the natural rate of unemployment. c. actual unemployment will be less than the natural rate of unemployment. d. both a and b are true.
Tariffs and quotas are one-size-fits-all measures that work as tools to internalize external effects.
Answer the following statement true (T) or false (F)