A downward shift in the Fed's reaction function is equivalent to:
A. a decline in the Fed's long-term target for inflation.
B. a downward shift of short-run aggregate supply.
C. an upward shift of short-run aggregate supply.
D. an increase in the Fed's long-term target for inflation.
Answer: D
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Suppose the government has a budget surplus of $2 billion. If there is no Ricardo-Barro effect, what occurs?
A) The demand for loanable funds curve shifts rightward, raising the interest rate, and increasing investment. B) The supply of loanable funds curve shifts leftward, lowering the interest rate, and increasing investment. C) The demand for loanable funds curve shifts leftward, lowering the interest rate, and decreasing investment. D) The supply of loanable funds curve shifts leftward, raising the interest rate, and decreasing investment. E) The supply of loanable funds curve shifts rightward, lowering the interest rate, and increasing investment.
When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased
How does this wage hike affect the Rent-A-Limo Company's average fixed cost, average variable cost, average total cost, and marginal cost?
What two measures of macroeconomic activity are often referred to as the "twin deficits"?
A) the budget deficit and the trade balance B) net capital flows and net exports C) the foreign exchange deficit and net foreign investment D) the saving-investment deficit and the export deficit
Consumer surplus
a. is closely related to the supply curve for a product. b. is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-sloping line. c. is measured using the demand curve for a product. d. does not reflect economic well-being in most markets.