An inflation goal set at a low rate but greater than zero allows all of the following except
A. For errors because of new products.
B. The Fed to meet less often.
C. The economy to achieve both full employment and price stability at the same time.
D. For price increases caused by quality improvements.
Answer: B
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A rise in the price level ________ the buying power of money and ________ the quantity of real GDP demanded
A) does not affect; does not change B) raises; decreases C) does not affect; increases D) lowers; decreases E) lowers; increases
Suppose the economy is experiencing frictional unemployment of 1 percent, structural unemployment of 3 percent and cyclical unemployment of 4 percent. What is the natural unemployment rate?
A) 3 percent B) 4 percent C) 5 percent D) 7 percent
Holding everything else constant, a decrease in the price of bicycles will result in
A) an increase in the demand for bicycles. B) a decrease in the supply of bicycles. C) a decrease in the quantity of bicycles demanded. D) an increase in the quantity of bicycles demanded.
The marginal product of labor for Acme, Inc is 15. The average product of labor is 25, and the price of labor is $10. Assuming that Acme, Inc is a competitor in its output and input markets, the marginal revenue product of labor:
A) is $10. B) is $150. C) is $250. D) is $375. E) cannot be determined with the information provided.