A way for policymakers to avoid the problems that deflation can present and still meet their objective of price stability is to:
A. set a target of zero inflation.
B. target a nominal interest rate of zero.
C. set a higher inflation target.
D. keep the monetary base fixed.
Answer: C
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Freeways in large cities tend to be congested during rush hours to the point where offer little or no advantage over non-freeway routes because
A) drivers generally ignore marginal benefits and costs. B) drivers usually ignore marginal benefits and costs during rush hours. C) no monetary fee is charged for the use of freeways during rush hours. D) not enough freeways have been constructed due to special interests' control of the government. E) people need to get to work and the demand for freeway travel is consequently inelastic during rush hours.
A financial asset is considered ________ if it can be bought or sold in a financial market
A) liquid B) a bond C) a security D) a stock
A tax wedge causes
A. consumer prices to equal producer prices. B. producer prices to rise above consumer prices. C. consumer prices to separate from producer prices. D. all prices to fall.
During recessions, GDP falls and unemployment increases. Why might the actual output produced not fall as much as officially measured GDP during recessions?
a. There is an increase in involuntary part-time employment during recessions, the output from which is not accounted for in GDP b. Workers who became unemployed during the recession may produce goods in the underground economy c. Unemployment benefits to laid off workers are included in GDP d. Laid off workers may start their own businesses, but profit income from self-employment is not accounted for in GDP e. Unemployed workers have more leisure time to enjoy.