In a move to increase its openness, the Fed has consistently increased the amount of information available to the public. According to the new classical model, the Phillips curve the Fed faces should become more:
a. horizontal.
b. very steep.
c. vertical.
d. unstable.
C
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When a central bank targets inflation, its inflation targets are usually specified as
A) a specific inflation rate target, for example, 1 percent. B) the short-term interest rate minus 2 percent. C) a point on the short-run Phillips curve. D) a range for the inflation rate. E) deviations from the inflation rate.
For every dollar's worth of government securities the Fed sells, the money supply
A) rises by more than $1. B) rises by less than $1. C) falls by less than $1. D) falls by more than $1.
The figure below shows the retail demand for running shoes. If the distributor (the retailer) is a monopoly and the marginal cost of distributing the shoes is $20 per pair, the manufacturer's wholesale demand curve lies
A) $20 below the retail demand curve, D.
B) $20 below the retail marginal revenue curve, MR.
C) $20 above the retail demand curve, D.
D) $20 above the retail marginal revenue curve, MR.
The most basic concepts on which the social science of economics rests are
a. consumers and producers. b. money, interest rates, and exchange rates. c. supply and demand. d. scarcity and choice.