If real GDP exceeds potential GDP, to move the economy to potential GDP the Fed
A) raises the federal funds rate to increase potential GDP but not real GDP.
B) lowers the federal funds rate to decrease real GDP but not potential GDP.
C) raises the federal funds rate to decrease real GDP but not potential GDP.
D) lowers the federal funds rate to increase potential GDP but not real GDP.
E) raises the federal funds rate to decrease both real GDP and potential GDP.
C
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As an example of the simplifications that make economic theorizing possible, the major economic "totals" are assumed to be constant in the study of
A) government budget deficits. B) macroeconomics. C) economic aggregates. D) microeconomics. E) unemployment and inflation.
When estimating a demand function for a good where quantity demanded is a linear function of the price, you should
A) not include an intercept because the price of the good is never zero. B) use a one-sided alternative hypothesis to check the influence of price on quantity. C) use a two-sided alternative hypothesis to check the influence of price on quantity. D) reject the idea that price determines demand unless the coefficient is at least 1.96.
Which of the following addresses agency costs
a. advertising for employee positions in as many outlets as possible b. hiring only from job fairs c. instituting longer work days d. replacing closed offices with cubical office spaces
If money raised in the issue of new stocks and bonds is used effectively,
a. the income from them is not subject to double taxation. b. a firm need not meet SEC requirements. c. the stock is being "watered." d. they generate the means of repayment.