According to mainstream economists, the Fed's adherence to a traditional monetary rule rather than to discretionary monetary policy is likely to:
A. reduce the severity of business cycles.
B. increase the amount of instability in the economy.
C. increase the rate of inflation.
D. crowd out much-needed investment spending during times of rapid inflation.
B. increase the amount of instability in the economy.
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The growth rate of real GDP in Astoria is 7.5%. Assume the growth rate of velocity is 0%
If Astoria wishes to decrease the inflation rate from the annual rate of 5.99% to a target rate of 4.5% and maintain its current growth rate of real GDP, by how many percentage points will the growth rate of the money supply need to change? A) -3 B) -2.99 C) -1.49 D) 2.99
Which of the following must be true if good X is a normal good and income increases?
A. The demand for X will increase, and thus the price and quantity sold and bought will decrease. B. The demand for X will decrease, and thus the price and quantity sold and bought will decrease. C. The demand for X will increase, and thus the price and quantity sold and bought will increase. D. The demand for X will decrease, and thus the price and quantity sold and bought will increase.
Suppose you and a classmate decide to split up tasks for a group project. In two hours you can write 6 pages of a paper or create 24 presentation slides. In the same two hours your classmate can write 4 pages of a paper or create 20 slides. Your work is of equal quality. Do you have an absolute advantage in production for this project?
What will be an ideal response?
As output increases, average fixed costs
A. increase. B. initially decrease and then increase. C. remain constant. D. decrease.