If the federal funds rate is set by the Taylor rule and the inflation rate increases by 3 percentage points, everything else remaining unchanged, for a given inflation target, the federal funds rate should ________
A) increase by 3 percentage point B) decrease by 3 percentage points
C) increase by 4.5 percentage points D) decrease by 1.5 percentage points
C
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Questions of what to produce, how much to produce, and who will get the output must be faced by
a. market economies. b. centrally planned economies. c. the economies of underdeveloped countries. d. all economies.
Using the UIP equation to determine the spot exchange rate requires a knowledge of:
I. expected future exchange rates. II. observed rates of interest. III. expected returns on foreign deposits . a. I and II b. II and III c. I and III d. I, II, and III
Which of the following is true of perfect competition but not true of monopoly?
a. The firm's average total cost curve is U-shaped. b. Marginal revenue is equal to price. c. A profit-maximizing firm chooses output where marginal revenue equals marginal cost. d. Profits may exist in the short run.
Different points along a downward-sloping demand curve come from
A. tangencies between indifference curves and budget lines that represent different prices of the good. B. tangencies between indifference curves and budget lines that represent different income levels. C. different points along any one budget line when the prices of the goods are held constant. D. different points along any one indifference curve when the prices of the goods are held constant.