All of the following are sources of the impact lag except
A) it takes some time for the deposit multiplier process to work itself out.
B) firms need some time to respond to the monetary policy with respect to their investment plans.
C) it takes time for the Fed to formulate a policy that best addresses a problem in the economy.
D) a monetary change is likely to affect the exchange rate, but that translates into a change in net
exports only after some delay.
Ans: C) it takes time for the Fed to formulate a policy that best addresses a problem in the economy.
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The above figures show the market for gasoline. Which figure shows the effect of motorists increasing the number of times they take the bus to work rather than driving their own cars?
A) Figure A B) Figure B C) Figure C D) Figure D
In periods when prices are falling, on average,
A) real GDP will grow as fast as nominal GDP. B) real GDP will grow slower than nominal GDP. C) real GDP will grow faster than nominal GDP. D) one cannot calculate real GDP.
A nondiscriminating monopolist earning positive short-run economic profit determines that its current marginal cost is $15 and its current marginal revenue is $20 . To maximize profit, a firm should
a. raise price and increase output b. raise price and decrease output c. maintain a constant price and increase output d. reduce price and increase output e. shut down
The vertical long-run aggregate supply curve implies that shifts in aggregate demand will, in the long-run,
A. change output and prices B. change interest rates C. change prices only D. change nothing