A credible nominal anchor
A) can help overcome the time-inconsistency problem by providing an expected constraint on discretionary policy.
B) can help to anchor inflation expectations, which leads to smaller fluctuations in inflation.
C) is required for a policy rule.
D) all of the above.
E) both A and B.
E
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An unregulated, single-price monopoly is shown in the figure above. If fixed cost is $20, the monopoly's total costs when it is maximizing its profit will be
A) $30. B) $40. C) $80. D) $140.
In an open economy, an increase in savings because of concerns about the future should cause the domestic real interest rate to ________ and should cause net exports to ________
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
From the last five recessions, the mildest two were
A) 1975 and 2008-09 recessions. B) 1981-82 and 2008-09 recessions. C) 1990-91 and 2001 recessions. D) 1975 and 2001 recessions.
A proportional tax is one in which the fraction of income paid in taxes rises as a person’s income increases.
Answer the following statement true (T) or false (F)