Refer to Table 15-1. The hypothetical information in the table shows what the values for real GDP and the price level will be in 2017 if the Fed does not use monetary policy
Which of the following policies makes sense if the Fed wants to keep real GDP at its potential level in 2017?
A) The Fed should lower capital gains taxes.
B) The Fed should lower the target for the federal funds rate.
C) The Fed should pursue contractionary policy.
D) The trading desk should sell Treasury securities.
B
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In the multiple-polluter case for a pollution permit system, suppose two firms, X and Y, face marginal abatement costs of MACX = 1.2AX and MACY = 0.4AY, respectively. To meet water quality standards, the government issues each firm pollution permits such that each firm must abate 20 units of pollution. If permit trading were allowed,
a. firm X would have an incentive to buy a permit as long as the price were less than $24 b. firm Y would be willing to sell a permit as long as the price were less than $8 c. at a permit price of $22, firm X would have an incentive to buy, but firm Y would have no incentive to sell d. no trading would take place because neither firm has an incentive to trade based on this model
An indifference curve will become ________ the origin the more that the consumer considers the two goods as substitutes
A) less bowed-in towards B) more bowed-in towards C) less bowed-out from D) more bowed-out from
The marginal revenue product
A) represents the incremental contribution to the firm's total revenues obtained from an increase in a variable input. B) always increases when there is an increase in a variable input. C) gives the increase in cost when there is an increase in a variable input. D) gives the change in total product when an additional unit of a good is hired.
In order to move the federal funds rate to the level it desires, the Fed must
A) first change the discount rate to the desired federal funds rate. B) specify the interest rate on previously issued government bonds. C) adjust the money supply to achieve the target federal funds rate. D) limit the amount of bank lending activity.