According to the Taylor rule, if actual output is greater than the natural rate of output, then the Fed should
a. decrease inflation.
b. increase interest rates.
c. conduct open market sales.
d. decrease interest rates.
e. Both a and b
D
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If an inverse relationship exists between two variables, then
What will be an ideal response?
Historical data suggests that a trend toward ________ natural employment ________
A) larger, deficits from the early 1960s to the mid-1980s. B) larger, surpluses form the early 1960s to the mid-1980s. C) smaller, surpluses form the mid-1980s to 1995. D) larger, surpluses from the mid-1980s to 1995.
The loss-minimizing output for the perfectly competitive firm occurs at the point at which
A) TR - MR = minimum. B) TR - TC = maximum. C) MR = MC. D) TC - ATC = maximum.
A good economic theory: a. rests on realistic assumptions
b. explains economic behavior and predicts well. c. can best be expressed mathematically. d. always provides a highly detailed analysis of an economic sector.