In the Keynesian model, suppose the Fed sets a target for the real interest rate. If the IS curve shifts up and to the right, and the Fed wants to keep output unchanged in the short run and the price level unchanged in the long run, what should the Fed do? Use the LR curve to formulate your answer.
What will be an ideal response?
Increase the real interest rate by shifting the LR curve up.
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Use the figure above to answer this question. Consider a perfectly competitive firm in a short-run equilibrium. Figure ________ shows a firm in bad times because the firm makes a(n) ________
A) A; economic loss of $4 per unit if the firm decides to operate B) A; economic loss of $4 so it must close C) B; economic loss of $3 per unit D) B; economic profit because the price exceeds average variable cost E) C; normal profit and can stay open in the long run
Marginal cost is
a. the increase in total cost per additional unit of output. b. the increase in total cost per additional unit of input. c. the decrease in total cost from producing one less unit. d. both the increase in total cost per additional unit of output and the decrease in total cost from producing one less unit.
The kinked demand curve is always associated with ___________ competition.
Fill in the blank(s) with the appropriate word(s).
Subprime mortgages are:
a. Mortgages loans to individuals who have lower credit ratings than would normally be approved by mortgage originators. b.Mortgage loans that were correctly underwritten but encountered problems in the securitization process. c. Mortgages that are healthy but not ready to be securitized. d. Mortgages that carry interest rates below the U.S. prime rate. e. None of the above.