A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost
a. True
b. False
Indicate whether the statement is true or false
True
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Discretionary monetary policy is monetary policy that is based on
A) the judgment of Congress about the current needs of the economy. B) the judgment of the monetary policymakers about the current needs of the economy. C) the ups and downs of the stock market. D) a rule that allows no discretion in how policymakers respond to the state of the economy. E) rules that depend upon the state of the economy.
In the new Keynesian model, a positive, permanent supply shock will result in ________
A) an increase in aggregate demand B) a decrease in aggregate demand C) no change in aggregate demand D) a change in aggregate demand, only if the shock is anticipated
Which statement most nearly describes a Nash equilibrium applied to price competition?
A) Two firms cooperate and set the price that maximizes joint profits. B) Each firm automatically moves to the purely competitive equilibrium because it knows the other firm will eventually move to that price anyway. C) Given the prices chosen by its competitors, no firm has an incentive to change their prices from the equilibrium level. D) One dominant firm sets the price, and the other firms take that price as if it were given by the market.
The capital account balance equals
A. Foreign purchases of U.S. assets plus U.S. purchases of foreign assets. B. The negative of the current account balance. C. The current account balance minus imports. D. The balance of payments plus the sum of the merchandise balance, the services balance, and unilateral transfers.