If a central bank were required to target inflation at zero, then when there was a positive aggregate supply shock the central bank
a. would have to increase the interest rate. This would move unemployment closer to the natural rate.
b. would have to increase the interest rate. This would move unemployment further from the natural rate.
c. would have to decrease the interest rate. This would move unemployment closer to the natural rate.
d. would have to decrease the interest rate. This would move unemployment further from the natural rate.
d
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Use the following graph to answer the next question.
In the diagram, Qf is the full-employment output. If the economy's present aggregate demand curve is AD2,
A. the most appropriate fiscal policy is a reduction in government purchases or an increase of taxes. B. the most appropriate fiscal policy is an increase in government purchases or a reduction of taxes. C. the government should undertake neither an expansionary nor a contractionary fiscal policy. D. the economy is achieving its maximum possible output.
In a game where individuals are asked to contribute to a public good, best response functions slope down because each individual believes the other will not give very much.
Answer the following statement true (T) or false (F)
Refer to the above table. Suppose the firm hires 4 workers and the price of the good sold is $4. The marginal factor cost of labor must be
A) $4. B) $150. C) $3080. D) $600.
Equilibrium and disequilibrium
A) are real world states. B) are mental constructs used by economists. C) foreshadow what is about to happen in a market. D) a and b E) a, b and c