Suppose that the Fed announces a low-money-growth policy to control inflation and workers sign low-wage contracts as a result. If instead, the Fed had implemented a high-money-growth policy, which of the following would not occur?
a. The unemployment rate would increase.
b. The Fed's stated policy would be time inconsistent.
c. The unemployment rate would be less than the natural rate.
d. The Fed would not achieve credibility through its actions.
e. The rate of inflation would be higher than expected.
a
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Some economists have argued that path dependence and switching costs can lead to market failure. Which of the following is an example of this argument?
A) VHS video recorders became more popular with consumers than Sony Betamax recorders even though the Betamax recorders embodied a superior technology. B) A consumer who won a lottery for a Super Bowl ticket refuses to sell it for $3,000 even though he would not have paid $3,000 for a ticket if he had not won the lottery. C) Costly celebrity endorsements lead many consumers to buy a product even though it is more expensive or less effective than a product that is not endorsed by a celebrity. D) While playing the ultimate game, an allocator decides to share $20 equally with a recipient rather than keep the $20 for herself.
People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?
a. Because the consumer ratings magazine must have a higher price for the issue reviewing pens and pencils. b. Because the value of the information, in terms of avoiding a mistake on the purchase, is much higher for an automobile than for a pen or pencil, it is more worthwhile to gather this information. c. Because people generally do not know which products are reviewed by these consumer magazines. d. None of the above explain this behavior.
In what way do public goods give rise to positive externalities?
The productivity of workers can depend upon which of the following?
A. Number of businesses established B. population growth C. Physical capital D. All of these are determinants of productivity.