The key goal of monetary policy is to..
What will be an ideal response?
maintain low inflation
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The "tech bubble" burst of 2000, the terrorist attacks of 2001 and the corporate scandals of 2001 and 2002 all had similar qualitative effects on the economy
Which of the following is an appropriate description of the mechanism that would have ensued? A) Household and business spending would have been eroded shifting the AD curve to the left. B) Unemployment would have risen and inflation would have fallen. C) Output would have declined below potential but through shifts in the AS curve, the self-correcting mechanism of the AD-AS framework would have brought the unemployment rate down to the lower levels we saw by 2004. D) all of the above E) none of the above
Special Grapes is a new wine company that wants to locate its vineyard in Sonoma Country, California, an exclusive area of the world for wineries. Which of the following will likely have the largest effect on Special Grapes' input prices?
A) land prices in Sonoma County, California B) compensating wage differentials C) traffic regulations in Sonoma County, California D) the additional wages Special Grapes will have to pay its employees to work in Sonoma County, California
If your disposable income increases from $10,000 to $15,000 and your consumption increases from $9,000 to $12,000, your marginal propensity to consume is:
A.0.8 B.0.6 C.0.4 D.0.2
Suppose there are only two firms in an economy: Cowhide, Inc produces leather and sells it to Couches, Inc, which produces and sells leather furniture. With each $1,000 worth of leather that it buys from Cowhide, Inc, Couches, Inc produces a couch and sells it for $2,600 . Neither firm had any inventory at the beginning of 2015 . During that year, Cowhide produced enough leather for 25 couches
Couches, Inc bought 80% of that leather for $20,000 and promised to buy the remaining 20% for $5,000 in 2016 . Couches, Inc produced 20 couches during 2015 and sold each one during that year for $2,600 . What was the economy's GDP for 2015? a. $25,000 b. $52,000 c. $57,000 d. $65,000