For a country suffering from a "liquidity trap," its government is unable to use standard monetary policy to boost borrowing and spending to move the economy toward its potential real product.
Answer the following statement true (T) or false (F)
True
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The economist who recognized that lags in policy can explain the difficulty in conducting monetary policy was
A) Adam Smith. B) John Nash. C) Milton Friedman. D) Joseph Schumpeter.
Use the following general linear demand relation:Qd = 100 - 5P + 0.004 M - 5PR where P is the price of good X, M is income, and PR is the price of a related good, R.What is the demand function when M = $50,000 and PR = $10?
A. Qd = 100 - 5P B. Qd = 350 - 5P C. Qd = 300 - 5P D. Qd = 200 - 5P E. none of the above
Investment in safety at the firm level poses a prisoners' dilemma because
A) if each firm plays its dominant strategy, joint profits are maximized. B) if each firm plays its dominant strategy, joint profits are not maximized. C) neither firm has a dominant strategy. D) the Nash equilibrium is not achieved.
Which of the following are consequences of inflation? a. It increases the burdens on people with fixed incomes when inflation is not anticipated
b. It hurts savers who did not anticipate how high the inflation was, but helps those who have borrowed at a fixed rate before the inflation became apparent. c. Inflation imposes costs on people who devote resources to protecting themselves from expected inflation. d. all of the above