If the Fed wanted to prevent a change in money demand from affecting real GDP, which of the following rules would be feasible and allow the Fed to attain its goal?
a. Keep government spending constant
b. Keep the money supply constant
c. Keep money demand constant
d. Keep taxes constant
e. Keep the interest rate constant
E
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Points outside the production possibilities curve represent combinations of products that are
A) unattainable. B) attainable only if the economy's resources are not fully employed. C) attainable if the economy's resources are either fully employed or not fully employed. D) attainable only if the economy's resources are fully employed.
A needed reform in the U.S. income tax system that would reduce the costs of inflation is to
A) go back to taxing nominal wage and salary income. B) start taxing real wage and salary income. C) go back to taxing nominal interest income. D) tax real interest income.
Jill, a bookkeeper just received an attractive offer from an outside firm. Her opportunity cost, of staying in her current position has
a. Increased b. Decreased c. Not changed d. All of the above
Exhibit 4-3 Supply and demand curves
In Exhibit 4-3, which of the following might cause a shift from S2 to S1?
A. A decrease in input prices. B. An improvement in technology. C. An increase in input prices. D. An increase in consumer income.