In the above figure, assume the aggregate demand of the economy is AD2 and the Fed actions move aggregate demand to AD1. In this situation, the Fed has practiced
A) contractionary monetary policy.
B) expansionary monetary policy.
C) irresponsible fiscal policy.
D) Keynesian fiscal policy.
A
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Explain the differences between a change in supply and a change in quantity supplied
What will be an ideal response?
The profit-maximizing firm should lay off workers when: a. MRC < MRP
b. MRC > MRP. c. MRC = MRP. d. the MP of labor begins to diminish.
Does the Fed have good control over the money supply?
a. Yes, open market operations generate exact changes in bank lending. b. Yes, reserve requirements create new loans. c. No, because of difficulties estimating the reserve ratio. d. No, because of difficulties estimating the size of the excess reserves and cash holdings by the public.
Dioxin emission that results from the production of paper is a good example of a negative externality because
a. self-interested paper firms are generally unaware of environmental regulations. b. there are fines for producing too much dioxin. c. self-interested paper producers will not consider the full cost of the dioxin pollution they create. d. toxic emissions are the best example of an externality.