If the Fed has a strong preference for stable prices relative to output, it responds to a price ________ with a ________ increase in the interest rate.
A. increase; large
B. decrease; large
C. decrease; small
D. increase; small
Answer: A
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The GDP price index can be interpreted as
A) (nominal GDP - real GDP) ÷ 100. B) (real GDP ÷ nominal GDP) × 100. C) (real GDP - nominal GDP) ÷ 100. D) (nominal GDP + real GDP) ÷ 100. E) (nominal GDP ÷ real GDP) × 100.
Identify the six basic requirements that economists generally agree must exist for a successful transition from socialism to a market-based system
What will be an ideal response?
A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10 percent interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in the table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat.Number of goatson the commonsPrice per 2-yearold goat ($)Income pergoat ($/year)180302752537020465155555 If each villager is purely self-interested, how many goats will be sent onto
the commons? A. 5 B. 3 C. 2 D. 4
In economic utility analysis, consumer tastes and preferences are assumed
A) to be determined by income. B) to be influenced by the prices of goods. C) given and stable for an individual. D) given but rapidly changeable.