To prevent monetary policy from becoming highly politicized, many countries have:
A. Made their central banks be politically independent
B. Put their central banks under the full control of their law-making agencies
C. Allowed the heads of their central banks to serve for very short terms
D. Made elected officials be the heads of their central banks
A. Made their central banks be politically independent
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Suppose the federal government implemented a flat tax to replace the income tax, and the flat tax saved taxpayers a total of $5 billion. A tax change such as this could be viewed as an example of the federal government implementing
A) contractionary monetary policy. B) contractionary fiscal policy. C) expansionary monetary policy. D) expansionary fiscal policy.
Suppose a decrease in the supply of paper results in an increase in revenue. This indicates that
A) the demand for paper is elastic. B) the supply of paper is elastic. C) the supply of paper is inelastic. D) the demand for paper is inelastic.
Before the financial crisis of 2007, inflation was on the rise. According to the MP curve, this would lead to ________
A) an increase in the real interest rate B) an upward shift of the MP curve, if policymakers opted for autonomous tightening C) a decrease in aggregate output D) all of the above E) none of the above
Can a firm's average variable costs be falling if they are less than the firm's marginal costs? Explain