During the financial crisis of 2008-2009, the U.S. government bailed out Goldman Sachs.
Answer the following statement true (T) or false (F)
True
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The short-run aggregate supply curve (SRAS) is the amount of real GDP: ?
A. produced at various price levels. B. ?produced at various savings rate levels. C. purchased at various price levels. D. ?purchased at various saving rate levels.
The larger the value of the marginal propensity to save (MPS)
A. the smaller is the value of the multiplier. B. the larger is the value of autonomous consumption. C. the larger is the value of the marginal propensity to consumption (MPC). D. the larger is the value of the multiplier.
When a firm has economic profits equal to zero
A) the firm is earning a normal rate of return on investment. B) the firm is not earning a normal rate of return on investment. C) the firm should shut down. D) the firm's accounting profits are also zero.
Suppose the equilibrium real federal funds rate is 3 percent, the target rate of inflation is 3 percent, the current inflation rate is 1 percent, and real GDP is 8 percent below potential real GDP. If the weights for the inflation gap and the output gap
are both 1/2, then according to the Taylor rule the federal funds target rate equals A) -3 percent. B) -1 percent. C) 3.5 percent. D) 7 percent.