Which of the following best describes the policy ineffectiveness proposition?
A) Monetary policy cannot change real GDP in a regular or predictable way.
B) Policymakers can be effective in changing real GDP only if people's expectations are correct.
C) Monetary policy can change real GDP only if the Fed pursues a consistent, stable growth rate of the real money supply.
D) Fiscal policy is totally ineffective in changing real GDP in both the short run and the long run.
A
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An emerging market country that successfully used exchange-rate targeting to lower its inflation from above 100 percent in 1988 to below 10 percent in 1994 (before devaluation) was
A) Thailand. B) Mexico. C) The Philippines. D) Indonesia.
Any point inside a production possibilities curve indicates that the economy is using all its available resources and technology
Indicate whether the statement is true or false
An airline is considering adding a flight from Chicago to Sioux Falls. Total cost of the flight is $5,500 . Variable cost is $2,000 . Revenue from the flight is expected to be $3,000 . Should the flight be added?
a. No, the revenue ($3,000 . is below the cost ($5,500.) b. No, the addition to profit is very small and not worth the effort. c. Yes, profit increases by $1,000 ($3,000 ? $2,000.) d. Yes, profit increases by $3,000.
The business cycle describes
A) the change in the standard of living across countries. B) the change in potential GDP over time. C) the behavior of real GDP over time. D) the behavior of nominal GDP over time. E) the behavior of GNP over time.