For the Fed to fully eliminate the costs of inflation, how low does the inflation rate need to be?
a. 0 percent
b. 3 percent
c. 5 percent
d. 6 percent
a
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List five major economic activities of government, and give an example of each.
What will be an ideal response?
Suppose the prices of a pair of jeans, a shirt, and a tie are $30, $20, and $10 respectively. Which of the following statements is true in this context?
A) The opportunity cost of buying a pair of jeans is 2 ties. B) The opportunity cost of buying a tie is 3 pairs of jeans. C) The opportunity cost of buying a tie is 2 shirts. D) The opportunity cost of buying a shirt is 2 ties.
$1 received n years from now has a value today of
A) ($1 + i)/i. B) $1/(1 + i). C) ($1 + i /i. D) $1/(1 + i .
Keynes argued that an economy could be in equilibrium when the economy was
A) operating at maximum potential capacity. B) operating with some unutilized productive capacity. C) trying to operate at some output level beyond its potential capacity. D) operating either at full productive capacity or at less than full capacity.