Recall the Application. When applying the Taylor Rule to the decade of 2000, economist John Taylor found that compared to past experience, the Fed
A) raised interest rates much too high and much too quickly.
B) should have maintained interest rates instead of raising them slowly.
C) should have lowered interest rates at a much faster pace.
D) was much too aggressive in lowering interest rates.
D
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Why does unemployment tend to change when the level of output changes?
A. Persons wish to buy things, and if output falls, people need to work less to earn the income to buy the smaller output. B. Labor is an input, and if output falls, employers need fewer workers to make it, so the employment falls. C. As output rises, more people are more interested in buying goods and services, and so these people work more to obtain the income needed to buy things. D. Persons face the option of buying or working, so that when they do more of one, the other necessarily falls. E. When companies replace workers with machines, output rises and people take more vacation time prior to returning to work.
According to your authors, the "boom-bust" cycle is primarily caused by
A) government tax and spend policies. B) an artificial lowering of interest rates through expansionary monetary policy. C) waves of irrational optimism and pessimism in the business community. D) a clash of interests among capitalists and laborers.
If the number of unemployed workers is 19 million, the number in the working-age population is 500 million, and the unemployment rate is 4%, what is the labor force participation rate?
A) 4.75% B) 7.8% C) 95% D) 96.2%
Frank can make 20 hot dogs an hour or 10 pints of potato salad an hour. Earnest can make 30 hot dogs an hour or 20 pints of potato salad an hour. Who has the comparative advantage making hot dogs and who has the comparative advantage making potato salad?