A policy is time consistent when:
A. the timing of a policy is irrelevant.
B. policymakers have incentives to make policy decisions in a time-sensitive fashion.
C. policymakers consider the future when making current policies.
D. policymakers have incentives to adhere to a policy decision made today, in the future.
Answer: D
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According to the circular-flow diagram GDP
a. can be computed as either the revenue firms receive from the sales of goods and services or the payments they make to factors of production. b. can be computed as the revenue firms receive from the sales of goods and services but not as the payments they make to factors of production. c. can be computed as payments firms make to factors of production but not as revenues they receive from the sales of goods and services. d. cannot be computed as either the revenue firms receive or the payments they make to factors of production.
Figure 9-7 shows cost curves for Penny’s Parasols, a perfectly competitive firm. At which point(s) would Penny’s Parasols endure economic losses, but continue to produce in the short run?
a.
D
b.
F
c.
A
d.
C
e.
E
A leftward shift of a product supply curve might be caused by
A. an improvement in the relevant technique of production. B. some firms leaving the industry. C. a decline in the prices of needed inputs. D. an increase in consumer incomes.
What is the output gap? How does it change when the economy goes into recession?
What will be an ideal response?