The Federal Reserve's policy reaction function provides information about:
A. the short-run target for inflation and how aggressively target will be pursued.
B. economywide money demand and the output gap.
C. the long-run target for inflation and how aggressively targets will be pursued.
D. economywide money demand and the long-run target for inflation.
Answer: C
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The slope of a typical isoquant is negative because to produce a given output, a producer
A) can use less of one input only if the productivity of that input increases B) will use more of one input only if the price of that input falls. C) will use more of one input only if it uses more of another. D) can use less of one input only if it uses more of another.
Suppose that Pat has the legal right to fly an extremely noisy airplane over Chris's apartment and that he values that right at $1,000 per year. Chris would be willing to pay $1,200 per year to avoid the noise. In that case
a. Pat will be required to eliminate the overflight b. Chris will move to a new apartment c. Pat and Chris have a powerful incentive to agree to eliminate the overflight because both would benefit from it d. some governmental agency will step in to require Pat to choose a different flight pattern e. some governmental agency will require Chris to move to a new apartment
A consumer has preferences over two goods, X and Y. Suppose we graph this consumer's preferences (which satisfy the usual properties of indifference curves) and budget constraint on a diagram with X on the horizontal axis and Y on the vertical axis. At the consumer's current consumption bundle, the consumer is spending all available income, and the marginal rate of substitution is less than the
slope of the budget constraint. We can conclude that the consumer a. is currently maximizing satisfaction subject to the budget constraint. b. could increase satisfaction by consuming more X and less Y. c. could increase satisfaction by consuming less X and more Y. d. could purchase more X and more Y and increase total satisfaction.
If Libby can produce 20 gallons of beer or 5 gallons of wine per hour, her opportunity cost of one gallon of beer is 4 gallons of wine.
Answer the following statement true (T) or false (F)