Suppose a government implements rules that result in a more independent central bank. What effect do you think this more independent central bank will eventually have on money growth and inflation in that country? Explain
What will be an ideal response?
Research suggests as central bank independence increases, average inflation rates decrease (which implies that money growth must be lower as well). The possible explanation for this deals with political manipulation of monetary policy. We would expect to see at some point both slower money growth and lower inflation.
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Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. If the marginal social cost of a satellite is $36, the efficient quantity of satellites is
A) 1. B) 2. C) 3. D) 4.
Which of the following will increase the velocity of circulation?
a. Interest rates increase. b. The inflation rate decreases. c. Federal banking legislation abolishes credit cards. d. Employers decide to pay employees once a month instead of once a week.
You are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the following table.ProjectBoom (50%)Recession (50%)A$20-$10B-$10$20C$30-$30D$50$50The variance in the returns of project C is:
A. 0. B. 225. C. 900. D. 1,600.
Use the Aggregate Supply- Aggregate Demand model to determine which of the following will lead to higher prices.
A. A fall in world oil prices B. An increase in interest rates C. A tax increase D. An increase in government spending