Money must be relatively "scarce" if it is to have value. True or False?
Indicate whether the statement is true or false.
Answer: True
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Suppose that there is an increase in the demand for money. What is the appropriate monetary policy response in the New Keynesian sticky price model?
A) an increase in the interest rate target B) no change in the interest rate target C) a decrease in the interest rate target D) an increase in government spending
Barbara owns a small shop where dresses are made. At the end of a given month, she has 250 dresses. Her expenses for the month are $1,000 for rent, $6,000 for wages, $1,500 for fabric and thread, and $500 for electricity. Her total variable costs for the month are:
a. c and e. b. $4,000. c. $32 per dress. d. $7,500. e. $8,000.
An expansionary (or loose) ___________ policy raises the quantity of money and credit above what it otherwise would have been and reduces interest rates, boosting aggregate demand, and thus countering recession.
a. monetary b. domestic c. trade d. banking
Diseconomies of scope occur when:
A. a firm's input prices rise as it increases output. B. a firm's average cost of production rises as it increases production. C. producing two products in a single firm is more expensive than producing them in separate firms. D. a firm's average cost of production falls as it increases production.