If Crusoe and Friday want to maximize their consumption possibilities,
What will be an ideal response?
Crusoe should specialize in producing good X and Friday in producing good Y; trade should occur to maximize joint consumption.
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An increase in supply will have what effect on equilibrium price and quantity?
A. Price will increase; quantity will decrease. B. Price will decrease; quantity will increase. C. Both price and quantity will increase. D. Both price and quantity will decrease.
The market structure that is most different from the model of perfect competition is:
A) monopolistic competition. B) monopsony C) oligopoly. D) monopoly.
An increase in demand could arise from which of the following factors
a. an increase in income b. a decrease in the price of a complement c. an increase in the price of a substitute d. all of the above
Given the following formula for the Taylor rule:Target federal funds rate = natural rate of interest + current inflation + 1/2(inflation gap) +1/2(output gap) If output in the economy were to fall by an additional one percent below potential, the target federal funds rate would:
A. Increase by 1.5%. B. Remain at 2.5%. C. Decrease by 0.5%. D. Decrease by 1.5%.