Under a nominal GDP targeting rule, the Federal Reserve
A) changes the interest rate only when real GDP, and hence nominal GDP, is off target.
B) cannot use the federal funds rate to conduct monetary policy.
C) must publish its expected inflation rate.
D) lowers its interest rate when nominal GDP falls below target.
E) loses its ability to influence the inflation rate.
D
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Concerning auctions, what is the definition of a "common-values setting"?
a. Bids are submitted using open outcries. b. Bids are submitted simultaneously, and the highest is selected as the winner. c. Bidders value the object the same, but are uncertain as to what that value is. d. Bids are submitted by syndicates of cooperating bidders.
Assume that the economy grows by 3 percent, total factor productivity grows by 2 percent, and the labor force grows at 2 percent. If labor contributes 40 percent to real GDP, then the stock of capital must have risen by 0.33 percent
a. True b. False Indicate whether the statement is true or false
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is
A) 1/3 hour for Andy and 1 hour for John. B) 1 hour for Andy and 1 hour for John. C) 3 loaves of bread for Andy and 1 loaf of bread for John. D) 1/3 loaves of bread for Andy and 1 loaf of bread for John. E) none of the above
Supply-side economist Arthur Laffer has argued that:
A. there is no empirically proven relationship between tax rates and incentives. B. large reductions in personal and corporate income taxes will increase aggregate supply much more than aggregate demand. C. the only way to eliminate inflation is to increase taxes to induce a recession severe enough to eliminate inflationary expectations. D. large cuts in income taxes will increase aggregate demand more than aggregate supply.