According to the Taylor rule, the Federal Reserve lowers the real interest rate as the output gap ________ or the inflation rate ________.
A. decreases; increases
B. increases; decreases
C. decreases; decreases
D. increases; increases
Answer: B
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Use the following graph of the market for milk to answer the question below.
The marginal cost for the 27th million gallon of milk is
A. $1.00. B. $2.00. C. $1.50. D. dependent on the marginal benefit.
If a good has “snob appeal,” consumers may purchase less when the price falls.
Answer the following statement true (T) or false (F)
Apply the concept of tax smoothing to the debate over tax-based versus spending-based fiscal stimulus
What will be an ideal response?
Which of the following statements is not true regarding the production function and the production possibilities curve?
A. The production possibilities curve expresses the ability to produce various combinations of goods given the use of all resources. B. A production function tells us the maximum amount of output attainable from the use of all resources. C. Both the production function and the production possibilities curve maximize the amount of output attainable. D. The production function describes the capacity of a single firm, whereas the production possibilities summarizes the output capacity of the entire economy.