Suppose the economy is just recovering from a recession and all signs now point to robust growth. How might this transition from recovery to expansion be reflected in the monetary policy curve?
What will be an ideal response?
The monetary policy curve will have been relatively low, as policy makers kept interest rates as low as possible to hasten recovery from the recession. Once the recession is over, the monetary policy curve will shift up, since low interest rates are no longer appropriate, and to reduce the danger that spending will climb too rapidly and cause inflation to rise. The curve may become steeper, as well, so that any increases in inflation are countered by substantial increases in the real interest rate.
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Answer the following statement(s) true (T) or false (F)
1. A risk-averse individual chooses to never place a bet. 2. Firms are more likely to exhibit risk-neutral behavior than are individuals. 3. Both ex ante and ex post preferences depend solely on the individual's tastes. 4. When a gamble is repeated many times, the average outcome is the expected value. 5. A risk-free basket has only one possible outcome.
What does it mean for a buyer or seller to be a price taker?
Since 1950, it can be observed that the female participation rate in our labor force has
A. increased. B. stayed constant. C. moved erratically up and down. D. decreased.
By focusing the customers on the price of a product, you make
a. The demand for the product more inelastic b. The customers less price sensitive to the product c. Both A & B d. None of the above