The most important role of the Federal Reserve in today's US economy is
A. Negotiating with foreign nations to reduce the enormous trade deficit
B. Controlling the money supply to pursue economic objectives
C. Balancing the government's budget by increasing taxes and cutting spending
Ans: B. Controlling the money supply to pursue economic objectives
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The most common measure of productivity shocks is known as
A) the Solow residual. B) the Lucas supply curve. C) the Prescott productivity parameter. D) the Kydland factor.
Suppose the marginal propensity to consume is 0.75. What does this mean? What do we know about the marginal propensity to save? What do we know about the average propensity to consume?
What will be an ideal response?
Watt Power and Light, an electric company, will suffer an economic loss
a. even at its profit-maximizing output because marginal cost is always less than average cost b. even at its profit-maximizing output because average cost is always less than marginal cost c. if regulators insist that it produce where price equals marginal cost because marginal cost is less than average cost d. if regulators insist that it produce where price equals marginal cost because average cost is always less than marginal cost e. if regulators insist that it produce where price equals average cost because average cost is always less than marginal cost
If borrowers and lenders expect a higher rate of inflation
What will be an ideal response?