Suppose the economy is producing below potential GDP and the Federal Reserve implements the appropriate change in monetary policy, but not until after the economy has started to recover from the recession. In this situation there is a real danger that
A) the Fed's expansionary policy will result in too small of an increase in GDP.
B) the Fed's expansionary policy will result in too large of an increase in GDP.
C) the Fed's contractionary policy will result in too large of a decrease in GDP.
D) the Fed's contractionary policy will result in too small of a decrease in GDP.
B
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According to the equation of exchange, if V = 10, P = 3, and Y = $50, then the money supply equals
A) $10. B) $15. C) $30. D) $150.
Refer to Table 14-2. For each firm, is there a better outcome than the current situation in which each firm charges the low price and earns a profit of $7,000?
A) Yes, the firms can implicitly collude and agree to charge a higher price. B) Yes, each firm can implicitly agree to increase output and not to deviate from a low price. C) No, there is no incentive for each firm to consider any other strategy. D) No, any other strategy hurts consumers.
Relative to a single-price monopoly, the effect of group price discrimination on social welfare is
A) beneficial. B) detrimental. C) neutral. D) ambiguous.
If there is a "long and variable time lag" between when a change in monetary policy is instituted and when it impacts aggregate demand and output, this will
a. make it easier for the Fed to properly time changes in monetary policy. b. make it more difficult for the Fed to properly time changes in monetary policy. c. not affect the Fed's ability to time monetary policy changes correctly. d. make it easier for the Fed to control inflation and achieve price stability.