A key concern of monetary policy makers is credibility. In particular, that people believe that inflation will not deviate far from a rate consistent with a healthy macroeconomy. How might credibility affect the slope of the monetary policy curve?
What will be an ideal response?
Credibility implies that the monetary policy curve will be relatively flat. When inflation expectations rely more on confidence in monetary policy and less on the latest fluctuations, small changes in the real interest rate suffice to prevent changes in inflation from acquiring momentum.
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Coase argues that every case of externalities
a. has a clearly identifiable cause. b. requires government intervention if efficiency is to be achieved. c. can be traced back to a principal-agent problem. d. is reciprocal in nature.
Refer to Table 20.1. George is a single taxpayer with an income of $65,000. What is George's average tax rate?
A) 19.00% B) 22.68% C) 23.61% D) 27%
To find the social marginal benefit of public goods, one needs to
A) sum the consumers' demand curves vertically. B) sum the consumers' demand curves horizontally. C) sum the marginal private benefit and the marginal external benefit for each unit. D) sum the marginal private cost and the marginal external cost for each unit. E) subtract the individual portion of the tax burden necessary for the government to provide the good from the demand curve of each consumer who desires the good.
Figure 21-1
In Figure 21-1, the optimal amount of equality lies only between which points?
A. A and B B. C and D C. D and E D. B and E