How does central bank independence cause lower inflation?
What will be an ideal response?
Central bank independence implies low expected inflation, which ensures that the short-run aggregate supply curve is always in or moving toward a position consistent with low inflation. An independent central bank has little if any incentive to allow inflation to rise uncontrollably. Though inflation may rise for many reasons beyond central bank control, expected inflation will not remain high, so long as it is known that the central bank will not knowingly pursue an inflationary policy.
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Are federal budget deficits related to trade deficits?
A) Yes. Higher deficit spending goes up resulting in more government borrowing, and foreign residents who lend funds to the U.S. government have fewer resources to spend U.S. export goods. B) Yes, but only if the quality of U.S. goods and services is deteriorating. C) Yes. If U.S. consumers buy too many imported goods, they do not have funds to save, and a budget deficit results. D) No. The budget deficit is entirely a domestic matter, while the trade deficit only affects U.S. citizens who travel abroad.
Autonomous tightening of monetary policy involves ________
A) raising interest rates and shifting the MP curve to the right B) lowering interest rates and shifting the MP curve to the left C) raising interest rates and shifting the MP curve to the left D) lowering interest rates and shifting the MP curve to the right E) none of the above
Refer to the above figure. The firm will just be covering all of its variable cost but none of its fixed cost
A) when the price equals $1. B) when the price equals $2. C) when the price equals $4. D) at prices between $1 and $2.
Which of the following most accurately describes the changes in the heights of adult, white males?
a. Since 1700, heights have increased steadily. b. There were small cyclical changes in height until about 1900, and since then heights have increased very rapidly. c. During the history of the US heights have been relatively constant. d. Height increased substantially until shortly after the Civil War, and has been relatively stable since then.