The Fed operating procedures employed between 1979 and 1982 resulted in ________ swings in the federal funds rate and ________ swings in the M1 growth rate
A) increased; increased
B) increased; decreased
C) decreased; decreased
D) decreased; increased
A
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A policymaker would prefer that the lag in the effect of a policy be
A) long and variable in magnitude or size. B) short and fixed in magnitude or size. C) long and fixed in magnitude or size. D) short and variable in magnitude or size.
Which of the following is not an example of moral hazard?
A. Investment banks use 40-1 leverage, knowing that if the market collapses, the government will come to the rescue. B. A backcountry skier takes an excessively dangerous run, knowing that local rescue crews will come to his aid if he gets in an accident. C. Insurance companies stopped offering insurance policies in New Orleans after a major hurricane, knowing the government will offer subsidies to draw people back. D. Domestic automobile companies fail to design high-quality fuel-efficient cars, hoping that the government will save them if oil prices skyrocket.
A situation in which output decreases while prices increase is often referred to as:
A. inflation. B. negative economic growth. C. a recession. D. stagflation.
For production to be at the ________ level of output, marginal benefit must equal social cost.
A. shut-down B. loss-minimizing C. efficient D. profit-maximizing