Even a monetary policy based on a rigid high-powered money growth rate rule can lack policy credibility, due in part to ________, while a policy that targets the inflation rate itself ________
A) lags, must have policy credibility by definition
B) lags, can lack credibility due to both lags and multiplier certainty
C) multiplier uncertainty, must have policy credibility by definition
D) multiplier uncertainty, can lack credibility due to both lags and multiplier uncertainty
D
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Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and automatic stabilizers move the economy back to long-run equilibrium
Using the static AD-AS model in the figure above, this would be depicted as a movement from A) D to C. B) B to A. C) C to B. D) E to A. E) A to E.
Suppose the current price of oil is $90 a barrel and the quantity supplied is 800 million barrels per day
If the price elasticity of supply for oil in the short run is estimated at 0.5, use the midpoint formula to calculate the percentage change in quantity supplied when the price of oil rises to $98 a barrel.
The backward-bending portion of the labor supply curve indicates that as the wage rate rises,
a. the substitution effect dominates the income effect of the higher wage. b. the number of hours worked increases. c. the income effect dominates the substitution effect of the higher wage. d. the income effect reinforces the substitution effect of the higher wage.
The two year time period it will take a company to build a new factory is an example of what?
a. short-run b. long- run c. diminishing marginal returns d. implicit costs