You have noticed that your next-door neighbor, Mary, always works in the garden, and her husband, Joe, always walks the dog. You conclude that if Joe and Mary are efficient, then it must be the case that:
A. Mary's opportunity cost of walking the dog is lower than Joe's.
B. Mary has an absolute advantage in gardening.
C. Joe has a comparative advantage in walking the dog.
D. Joe experiences increasing opportunity costs when he gardens, but not when he walks the dog.
Answer: C
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According to the Taylor rule, the Federal Reserve sets interest rates in response to:
A. the inflation rate and the current output gap. B. the inflation rate and the unemployment rate. C. the current output gap and the target money supply growth. D. the S&P 500 index and the inflation rate.
A firm's demand for labor curve is the same as the firm's
A) marginal product curve. B) marginal cost curve. C) marginal revenue curve. D) value of marginal product curve.
If the Fed chose to change its policy actions implemented during the heart of the recession faster than the timing suggested by the White House, this would be an indication of the Fed's
A) independence. B) frictional relationship with the White House. C) changing its monetary policy target. D) lack of credibility.
The vertical axis for an aggregate demand curve measures
A. real Gross Domestic Product? (GDP). B. quantity demanded of the representative good. C. the interest rate. D. the price level.