Based on the Taylor Principle, a central bank's endogenous response of raising interest rates when inflation rises
A) causes an upward movement along the monetary policy curve.
B) causes a downward movement along the monetary policy curve.
C) shifts the monetary policy curve upward.
D) shifts the monetary policy curve downward.
A
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
The interest rate that banks charge other banks for loans is the
A) discount rate. B) prime rate. C) federal funds rate. D) Treasury bill rate.
The economic system of the United States
A) was designed by mercantilists and capitalists. B) was designed by the framers of the U.S. constitution. C) was designed to maximize individual freedom. D) was designed to maximize output per capita. E) was the result of human intentions but not anyone's design.
Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is producing a level of output which is:
a. equal to the profit maximizing level of output. b. equal to revenue maximizing level of output. c. less than the profit maximizing level of output. d. zero. e. greater than the profit maximizing level of output.