According to the Taylor rule, if inflation rises 1 percent above a target rate of 2 percent, the Fed should raise the federal funds rate, relative to the current rate of inflation, by:
A. 0.5 percentage point.
B. 1 percentage point.
C. 1.5 percentage points.
D. 2 percentage points.
A. 0.5 percentage point.
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Refer to Figure 7-2. With the tariff in place, the United States produces
A) 18 million pounds of coffee. B) 20 million pounds of coffee. C) 26 million pounds of coffee. D) 38 million pounds of coffee.
Which of the following is a stock variable? The number of
A) unemployed people. B) reentrants. C) job losers. D) job leavers.
Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. Now suppose that the increase in the price of oil in the second half of 2007 causes the IS curve in the United States to shift to the left. If all other things remain unchanged, what will happen to U.S. interest rates?
A) They will rise. B) They will fall. C) They will not change. D) They will rise dramatically.
In which market structure will a firm choose not to shut down when price is less than average variable cost?
A) perfect competition B) monopoly C) monopolistic competition D) All of the above. Any firms will shut down when P < AVC.