First, briefly explain what is meant by the policy mix. Second, explain what effect different policy mixes might have on the level of output, investment, and the interest rate
What will be an ideal response?
The policy mix refers to the possible combinations of monetary (exp. or contr.) and fiscal (exp. or contr.) that can be simultaneously implemented. There are a number of different answers that could be given to the latter part of the question. The effects on output, the interest rate, and investment will depend on the type of mix.
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In a duopoly with homogeneous products, the best response of a firm is to charge a lower price than its rival as long as ________
A) the rival's price is above marginal cost B) the rival's price is below marginal cost C) the rival's price is above average cost D) the rival's price is below average cost
Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, the market clearing price ________ and the equilibrium quantity ________.
A) definitely falls, is indeterminate
B) is indeterminate, definitely falls
C) definitely falls, definitely rises
D) definitely rises, is indeterminate
Which of the following helped to maintain a healthy farm sector prior to 1920?
A. Recurrent wars. B. More advanced technology. C. Food for peace programs. D. A decreasing population.
Policy making that is carried out in response to a rule is
A) restrictive policy making. B) passive policy making. C) determined policy making. D) active policy making.