For the Fed, price stability means a low and stable rate of inflation
a. True
b. False
A
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Based on the model given, the cost-effective solution would arise if
Suppose that two firms, X and Y, face the following abatement costs: MACX = 1.2AX, MACY = 0.3AY TACX = 0.6AX2 TACY = 0.15AY2 Further assume that the combined abatement standard is 40 units for both firms. a. each firm abates 20 units of pollution b. firm X abates 8 units, and firm Y abates 32 units c. firm Y does all the abating because its MAC is lower d. firm X abates 24 units, and firm Y abates 16 units e. none of the above
A recession conventionally is defined as a decrease in
A) real GDP that lasts for at least six months. B) the growth rate of real GDP that lasts for at least six months. C) potential GDP that lasts for at least six months. D) real GDP that lasts for at least three months. E) the inflation rate that lasts for at least six months.
Using Taylor's rule, when the equilibrium real federal funds rate is 3 percent, the positive output gap is 2 percent, the target inflation rate is 1 percent, and the actual inflation rate is 2 percent, the nominal federal funds rate target should be
A) 5 percent. B) 5.5 percent. C) 6 percent. D) 6.5 percent.
If Jet Cruises chooses to Ad and Easy Sail then chooses to Ad, Jet Cruises earns ________ million in net profit and Easy Sail earns ________ million.
Jet Cruises wants to prevent Easy Sail from entering the sailboat market. The above game tree illustrates the different strategies and corresponding payoffs for the two firms. Both Jet Cruises and Easy Sail have the same strategies of advertising (Ad) or not advertising (No Ad). The payoffs represent net profit in millions.
A) $4; $3 B) $10; $2 C) $2; $4 D) $5; $2