Is the Taylor rule of greater use to activist or to nonactivist policy makers?
What will be an ideal response?
Nonactivist. The Taylor rule is an alternative to discretionary policy that relies on debatable projections to justify arguably ad hoc interventions. The rule is too crude to eliminate discretion entirely, but serves as a restraint on activist tendencies.
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The income and substitution effects move in ________ for lenders and in ________ for borrowers
A) the same direction; the same direction B) the same direction; opposite directions C) opposite directions; the same direction D) opposite directions; opposite directions
A major fruit juice manufacturer failed in its attempt to engage in price discrimination between students and all other consumers. What is a possible explanation for this failure?
a. There was nothing to prevent the students from reselling the fruit juice to other consumers. b. The fruit juice manufacturer produced in a perfectly competitive market. c. The two groups of consumers probably have the same demand elasticity for fruit juice. d. The cost of producing the product is relatively high. e. Demand for fruit juice is probably inelastic.
If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil
a. will increase the demand for coal. b. will reduce the demand for coal. c. will increase the supply of coal. d. will reduce the supply of coal. e. will not affect the demand for coal.
Which approach to calculating GDP would be best to compare consumer activity versus government purchases?
A. The value-added approach B. The expenditure approach C. The income approach D. Any of these measurements will allow that comparison equally well.