Under what conditions will the inflationary impact of an expansionary monetary policy be the largest?
A. When equilibrium real GDP is at potential real GDP.
B. When there is a recessionary gap.
C. When unemployment rates are high and there is substantial excess industrial capacity.
D. When real GDP is falling and the price level is decreasing.
Answer: A
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Refer to the figure below.
If a price ceiling were imposed at $4, total economic surplus would be ________, which is ________ less than when the market is unregulated market.
A. $8; $24 B. $24; $16 C. $24; $8 D. $48; $8
The top executives who run a corporation
What will be an ideal response?
Cummins, Hubbard, and Hassett found that investment responded to a tax change that affected the user cost of capital, with an elasticity of
A. -0.25. B. 0. C. -0.66. D. -1.
Susan's search costs are $7 per search. She wants to buy a coat, and the lowest price she has found so far is $180. Susan thinks 25 percent of the stores charge $180 for this coat, 50 percent charge $160, and the other 25 percent charge $150. Susan's optimal decision is to:
A. stop searching and purchase a coat for $180. B. continue to search for a lower price since the expected benefit of an additional search is $17.50, which exceeds her per-unit search costs. C. continue to search for a lower price since the expected benefit of an additional search is $10, which exceeds her per-unit search costs. D. continue to search for a lower price since the expected benefit of an additional search is $7.50, which exceeds her per-unit search costs.