What was the lowest federal funds rate target the Fed set in response to the financial crisis?
a. 0%
b. 1.8%
c. 2.0%
d. 2.2%
a
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Which of the following statements is FALSE?
A. In the short run all inputs are fixed. B. A firm plans in the long run and operates in the short run. C. In the long run all inputs are variable. D. In the short run, a firm can change some but not all of its inputs.
Ian McDonald owns a company that sells sleds in a perfectly competitive market. A lighter-than-normal snowfall has caused the market demand curve for sleds to shift to the left. In the short run, which of the following is likely to happen?
a. The market price for sleds will remain unchanged. b. The market price for sleds will increase. c. More sled producers will enter the industry. d. Increased economic profit will be earned by the firms in the sled industry. e. The market price for sleds will fall.
Suppose a temporary tax cut today is combined with a rise in tax rates on the next generation of taxpayers. This long delay in increasing future taxes would not in itself cause the Ricardian equivalence proposition to fail to accurately predict the effects of the tax cut, unless the
A. parents were far-sighted in their expectations of future tax increases. B. parents saved the tax cut. C. parents failed to leave bequests. D. parents invested the tax cut.