If aggregate spending in an economy can be written as Y = 15,000 + 0.6Y - 20,000r, and potential output equals 36,000, what real interest rate must the Federal Reserve set to bring the economy to full employment?
A. 4 percent
B. 5 percent
C. 2 percent
D. 3 percent
Answer: D
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Which of the following actions can be categorized as rent seeking?
a. Increase in the income tax rates by the government b. Lobbying efforts of individuals or groups to gain favors from the government c. Profit maximizing firms charging a price greater than their marginal costs d. Export of goods from developing to developed countries e. Government intervention in the real estate market
In an economy with persistent inflation,
a. real GDP will grow faster than nominal GDP. b. nominal GDP will grow faster than real GDP. c. nominal and real GDP will grow at the same rate. d. nominal and real GDP will both fall.
A normal variable is standardized by:
A. subtracting off its mean from it and multiplying by its standard deviation. B. adding its mean to it and multiplying by its standard deviation. C. subtracting off its mean from it and dividing by its standard deviation. D. adding its mean to it and dividing by its standard deviation.
Suppose an increase in symphony tickets prices reduces the total revenue. This is evidence that demand is:
A. price elastic. B. price inelastic. C. unitary elastic. D. perfectly elastic.