One reason the Fed tolerates ongoing inflation is because it
a. believes that the CPI understates the actual inflation rate
b. believes that the CPI overstates the actual inflation rate
c. accepts the idea that a zero inflation rate would make labor markets work more smoothly
d. wants to focus more on price stability than on full employment
e. is uncertain about the long-run stability of the Phillips curve
B
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Each of the following is a challenge that society's would face in trying to use the second welfare theorem to achieve equity without sacrificing efficiency EXCEPT:
A. endowments aren't always easily observable. B. wealth isn't an endowment. C. lump-sum transfers distort choices. D. transfers based on wealth aren't lump-sum transfers.
Which of the following environmental approaches is most appropriate when surveillance and enforcement is impractical?
A. Direct controls B. Emissions tax C. Volunteerism D. Tradable emission permits
If real interest rates in the US increase relative to real interest rates in other countries which of the following will occur?
a. capital will flow out of the US b the demand for loanable funds in the US will increase c. the supply of the loanable funds will increase in other countries d. the supply of loanable funds will increase e. the demand for loanable funds will increase in other countries
The law of increasing opportunity cost explains why the shape of the production possibilities curve is:
A. a straight line parallel to the horizontal axis. B. bowed inward (convex) to the origin of the graph. C. a straight line from one axis to the other. D. bowed out (concave) from the origin of the graph.