The situation in which short-term interest rates are pushed to zero, leaving the central bank unable to lower them further is known as
A) the Taylor rule.
B) a liquidity trap.
C) a zero-sum game.
D) an interest rate panic.
Answer: B
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What will be the effect of a tax cut on consumption if consumption offers diminishing returns?
What will be an ideal response?
The fact that money can be exchanged for goods reflects money's role as a
A) cause of inflation. B) medium of exchange. C) unit of account. D) store of value.
In monopolistic competition, in the long run firms have
A) a capacity shortage. B) excess capacity. C) an economic profit. D) an economic loss.
Suppose that in Australia, the government allows private ownership of chickens but not of cows. If the people of Australia permanently increase their desire to purchase more chicken and beef, in the long run, we would expect
a. the population of chickens to rise and the population of cows to fall. b. the population of cows to rise and the population of chickens to fall. c. the populations of both chickens and cows to increase. d. both chickens and cows to become extinct in Australia unless the government places the animals on the endangered species list.