If the inflation rate target is 2%, the current inflation rate is 3%, and the output gap is 2%, then according to the Taylor rule, the nominal federal funds rate should be ________ percent
A) 4.5
B) 7
C) 6.5
D) 5.5
E) none of the above
C
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Suppose the equilibrium rent in Denver is $1,050. A rent ceiling of $755 per month leads to
A) a surplus of apartments in Denver. B) a shortage of apartments in Denver. C) no change in the Denver apartment market. D) fair prices in the Denver market. E) compared to the situation at the equilibrium rent, a decrease in the quantity of apartments demanded and an increase in the quantity of apartments supplied.
Refer to Figure 7.1. At output level Q2
A) average fixed cost is increasing. B) average variable cost equals average fixed cost. C) marginal cost is negative. D) average total cost is negative. E) none of the above
Inelastic demand implies
A) that a one percent increase in price results in a smaller than one percent decrease in quantity demanded. B) that a one percent increase in price results in a larger than one percent decrease in quantity demanded. C) that a one percent cut in price results in a larger than one percent increase in quantity demanded. D) that a one percent decrease or increase in price induces no change in total revenue.
The additional revenue obtained by a firm when it hires an additional worker, holding other inputs constant, is
A) the marginal physical product of labor. B) the marginal revenue product of labor. C) the marginal cost of labor. D) equal to total revenue divided by the number of workers.