Monetarists think that the government:
a. should take an active role in the economy.
b. should change the money supply growth rate regularly to achieve low inflation.
c. should actively intervene in the economy, but only by decreasing the fiscal expenditure.
d. should intervene in the economy as little as possible.
e. should consciously set out to achieve full employment.
d
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Moving along the short-run aggregate supply curve, ________
A) the real wage rate is constant B) real GDP equals potential GDP C) the money wage rate, the prices of other resources, and potential GDP remain constant D) real GDP equals nominal GDP
In the context of the neoclassical growth model, which of the following does NOT explain the growth rates of countries which are initially poor?
A) nations which are below their steady-state growth paths will grow more slowly until they reach the steady state B) the rate of return is higher in poor countries C) capital flows from rich countries to poor countries D) the passage of time allows poor countries to adopt the productive techniques of rich countries.
Suppose a risk-neutral power plant needs 10,000 tons of coal for its operations next month. It is uncertain about the future price of coal. Today it sells for $60 a ton but next month it could be $50 or $70 (with equal probability). How much would the power plant be willing to pay today for an option to buy a ton of coal next month at today's price? (Ignore discounting over the short period of a
month.) a. 5 b. 4 c. 3 d. 0
Refer to Scenario 7.1 below to answer the question(s) that follow. SCENARIO 7.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year. Refer to Scenario 7.1. Your economic profit last year was
A. -$40,000. B. -$10,000. C. $10,000. D. $30,000.