In economics, the expression "You can lead a horse to water, but you can't make it drink" illustrates the:
A. crowding-out effect.
B. cyclical asymmetry of monetary policy.
C. administrative lag that occurs in formulating monetary and fiscal policies.
D. operational lag in monetary policy.
B. cyclical asymmetry of monetary policy.
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good.
Answer the following statement true (T) or false (F)
Which of the following is correct?
a. Nominal and real interest rates always move together. b. Nominal and real interest rates never move together. c. Nominal and real interest rates do not always move together. d. Nominal and real interest rates always move in opposite directions.
Refer to the given data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $10 to $12. As a result of the wage increase, firms will hire:
A. fewer workers and the total paid out for wages will decline.
B. fewer workers, but the total paid out for wages will increase.
C. fewer workers, but the total paid out for wages will remain unchanged.
D. more capital, if capital and labor are used in fixed proportions in production.