In the table above, if the wage rate is $12.00 per hour, the profit-maximizing number of workers is
A) 2.
B) 3.
C) 4.
D) 5.
B
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In principle, a cap-and-trade program would
A) cause firms to generate more pollution than their allowed limits. B) cause firms to generate less pollution than their allowed limits. C) raise the production costs of all firms. D) lower the production costs of all firms.
When a perfectly competitive, well-functioning market is not in equilibrium:
A. total surplus can be increased by a change in market price. B. the market is not efficient. C. there are exchanges that can make some better off without someone becoming worse off. D. All of these are true.
What is the difference between the Keynesian and rational expectations theories concerning the success of stabilization policy?
Imagine the inflation rate begins to rise rapidly, the FOMC meets and it is believed that the target interest rate needed to stem the inflation could easily exceed 20 percent. Many members of the committee believe the Fed cannot announce this high of a target for political reasons. Discuss what the FOMC could do in terms of targets and what change occurred in 2002 that is going to make their job a bit more difficult.
What will be an ideal response?