Central banks can improve the welfare of a society by doing all of the following except:
A. focusing on keeping the overall level of prices stable.
B. serving the interests of government rather than the public at large.
C. helping to reduce the volatility of business cycles.
D. helping to promote economic growth.
Answer: B
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Answer the following statement(s) true (T) or false (F)
1. In both the short-run and the long-run, a monopoly is guaranteed to earn positive profits. 2. An excise tax will increase the deadweight loss due to monopoly, but an excise subsidy can reduce the deadweight loss. 3. An unregulated, profit maximizing monopoly will never set a price where demand is inelastic. 4. The large increase in the price of oil and in the total revenues and profits of the US oil industry in the 1990's are evidence that it was exercising monopoly power. 5. A monopoly's supply curve is the portion of its marginal cost curve that lies above its average variable cost curve.
If price changes by one firm induce rival firms selling close substitutes to alter their prices,
A) firms will be able to raise their prices without fear of losing sales. B) the demand curve will shift in response to a change in price. C) the original firm faces an elastic demand curve. D) the original firm faces an inelastic demand curve. E) there is no competition between the rival firms.
The law of supply includes the statement "other things being equal." These other things include all of the following EXCEPT
A) resource prices. B) technology. C) producers' expectations. D) consumer's income.
Michelle Palmisano has the rare talent to be a top rodeo rider, yet her winnings are not anywhere near the level of players in the major pro sports. The reason is that
a. anyone can ride in a rodeo b. demand and supply have simultaneously shifted by unknown amounts c. demand for her talent is not sufficient to support a high level of pay d. technology for saddles has not advanced for a long time e. consumer incomes have been increasing substantially