According to the Taylor rule, the Federal Reserve sets interest rates in response to:
A. the inflation rate and the current output gap.
B. the current output gap and the target money supply growth.
C. the S&P 500 index and the inflation rate.
D. the inflation rate and the unemployment rate.
Answer: A
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During recessions, when some workers lose their jobs and have lower incomes, sales of durable goods (goods with a life expectancy of 3 years or more) decline. Apparently, durable goods are:
A. inferior goods. B. substitutes. C. complements. D. normal goods.
Which type of cost does depend on a firm's output?
A. total cost B. variable cost C. marginal cost D. all of the above
If decision makers have limited ability to calculate profits from all possible combinations of options, they are said to have
A) dementia. B) bounded rationality. C) Pareto inefficiency. D) a maximin problem.
An explicit cost is: a. an opportunity cost for which payment is not required. b. an out-of-pocket expense
c. always larger than an associated implicit cost. d. both (a) and (b)