The firm's efficient scale is the quantity of output that minimizes
a. average total cost.
b. average fixed cost.
c. average variable cost.
d. marginal cost.
a
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In practice, money growth targeting was
A) a good idea. B) a policy introduced in the U.S. in the 1970s, which continues to the present. C) better than interest rate targeting. D) a failure.
Under a pure price system, the decision of resource allocation is made by
A) the head of the government. B) a queen or king. C) individuals who own the resources. D) no one.
When the Fed buys government bonds,
a. the money supply increases and the federal funds rate increases. b. the money supply increases and the federal funds rate decreases. c. the money supply decreases and the federal funds rate increases. d. the money supply decreases and the federal funds rate decreases.
The figure below shows an IS-LM-FE model for an economy with fixed exchange rates. Initially the economy was at Point A, a triple intersection. Here, the FE curve is flatter than the LM curve.
To defend the fixed exchange rate, at Point B the country's monetary authority must
A. sell domestic currency. B. buy domestic currency. C. sell foreign government bonds. D. buy domestic government bonds.