Zero interest rate bound means the interest rate cannot go below zero.
Answer the following statement true (T) or false (F)
True
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Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should
a. plant more corn so that they would be able to sell more each year. b. increase spending on fertilizer in an attempt to produce more corn on the acres they farm. c. reduce the number of acres on which they plant corn. d. contribute to a fund that promotes technological advances in corn production.
The elements of the stimulus package adopted in 2009 that allowed states to pay $25 per week more than they had being paying in unemployment compensation should be considered
A. monetary policy. B. non-discretionary fiscal policy. C. discretionary fiscal policy. D. neither discretionary nor non-discretionary fiscal policy programs.
A temporary decrease in the price of oil would be considered a:
A. long-run supply shock. B. demand shock. C. short-run supply shock. D. The changing price of oil would not affect any of these.
Assume the following: (1 ) the real cost of a unit of capital is one; (2 ) the unit of capital is expected to increase a firm's real profit by $10,000 each year, and depreciate by 8% each year (? = .08); and (3 ) The real interest rate is 2% (r = .02). What is the "user cost" or "rental cost" of this unit of capital?
A) .02 B) .06 C) .10 D) .08/.02 = 4 E) none of the above