One role of the interest rate is to
A) allocate capital to its most efficient uses.
B) redistribute income from the wealthy to the poor.
C) reduce the rate of inflation by encouraging government borrowing.
D) discourage saving and encourage current consumption.
A
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The monetary policy strategy that directly ties down the price of internationally traded goods is
A) exchange-rate targeting. B) monetary targeting. C) inflation targeting. D) the implicit nominal anchor.
Assuming that money demand is completely interest insensitive, the
a. LM schedule will be horizontal. b. LM schedule will be vertical. c. IS schedule is vertical. d. IS schedule is horizontal.
Describe some of the ways in which firms differentiate their products.
What will be an ideal response?
A profit-maximizing firm will hire additional units of labor until
A) the additional cost of hiring the last worker equals the additional revenue generated by that worker. B) the additional cost of hiring the last worker equals the marginal factor cost of the worker. C) the extra revenue from hiring the last worker equals the marginal physical product of labor. D) the extra cost from hiring the last worker equals the cost of the product.