Raising interest rates following the use of unconventional policy tools depend on
A. both the size and composition of the central bank's balance sheet and the toolbox available to the central bank.
B. the size and composition of the central bank's balance sheet.
C. neither the size and composition of the central bank's balance sheet and the toolbox available to the central bank.
D. the toolbox available to the central bank.
Answer: A
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A nation can determine how close it is to the classical range by considering its:
a. Net export position. b. Capacity utilization index. c. Exchange rate. d. All of the above.
Recall the Application. One difference between a value-added tax and an income tax is the value-added tax
A) is a progressive tax. B) is not a consumption tax. C) does not penalize individuals who save. D) is difficult to collect.
Suppose the Fed cares only about keeping the economy close to full-employment output
The Fed can target the real money supply (thus keeping the LM curve fixed) or it can target the real interest rate, changing the money supply and shifting the LM curve however is necessary to prevent a change in the real interest rate. (a) Which is the best policy if the main shocks to the economy are shocks to the IS curve? Explain why. Illustrate with a diagram. (b) Which is the best policy if the main shocks to the economy are shocks to real money demand? Explain why. Illustrate with a diagram.
Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment.Pat's explicit costs are ________, and Pat's implicit costs are ________.
A. $16,000; $51,000 B. $15,000; $36,000 C. $35,000; $16,000 D. $16,000; $35,000