If the inflation rate target is 2%, the current inflation rate is also 2%, and the output gap is zero, then according to the Taylor rule, the nominal federal funds rate should be ________ percent
A) zero
B) two
C) four
D) three
E) none of the above
C
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A firm is said to have excess capacity when it produces the amount of output
A) such that price is greater than marginal cost. B) such that marginal revenue is greater than marginal cost. C) smaller than that which minimizes average total cost. D) larger than that which minimizes average total cost.
In U.S. recessions, growth in total consumption is ________, which is ________ with the workings of the permanent-income and life-cycle hypotheses
A) largely uninterrupted, perfectly consistent B) largely uninterrupted, rather inconsistent C) noticeably reduced, perfectly consistent D) noticeably reduced, rather inconsistent
Which of the following is not an idea advocated by Adam Smith?
a. Businesspersons conspiring to fix prices are a threat to the price system. b. Pursuit of private self interest with an invisible hand is the best way to promote the public interest. c. Government should control the economy. d. The government should provide for national defense and little else.
The gains from trade creation are likely to be larger for a country if
A. the supply of the imported good by the foreigners is relatively inelastic. B. it mainly imports primary products. C. its import demand curve is relatively elastic. D. the country's government sufficiently subsidizes the production of its exportable goods.