A problem with a precommitment policy is that it:
A. locks the Fed into contractionary policy.
B. determines the Fed's response for a period of time.
C. binds the hands of the Fed from responding to unexpected events.
D. will cause the Fed to lose credibility.
Answer: C
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If the social costs of refining oil are greater than the private costs of oil refining, then
A) the external costs of oil refining are greater than the social costs of oil refining. B) users of products that use refined oil are paying too much for the products. C) there is too much oil refining. D) the amount of oil refining needs to increase in order to bring social costs and private costs in line with each other.
Suppose the insurance company cannot tell them apart but expects them to be different values and charges them an average premium of $1850 . How much profit would it make?
a. $1850 b. Zero-they would break even c. They would make a loss of $650 d. They would make a loss of $1100
The slope of a horizontal line is always equal to zero
Indicate whether the statement is true or false
In the chain of cause and effect involving monetary policy:
a. An increase in the money supply will decrease the rate of interest b. An increase in interest rates will increase the money supply c. A decrease in the rate of interest will decrease aggregate demand d. A decrease in aggregate demand will increase output and employment