Refer to Figure 14.3. Suppose the economy is initially at long-run equilibrium and the Fed increases the target inflation rate, and to hit this rate, it must reduce the real interest rate. The economy then reaches a new, short-run equilibrium point
Assuming expectations are adaptive, the next movement is best represented as a movement from A) point C to point B.
B) point C to point A.
C) point D to point C.
D) point B to point C.
D
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The discount rate is the rate that the
a. Treasury pays on savings bonds. b. Fed charges member banks. c. Fed charges on government securities. d. Fed charges the Treasury for sales of securities.
In this graph of a firm’s supply and demand for labor, at what point are profits of labor maximized?
a. before MRP reaches W*
b before q* reaches W*
c. when there are q* workers
d. when quantity is highest
The biggest difference between mutual funds and life insurance policies is:
A. one is considered savings, and the other is an investment. B. one is a savings plan, and one allows you to reduce your risk. C. when you can have access to your contributions. D. when you are required to contribute to them.
Which of the following is a characteristic of a perfectly competitive market?
A. a large number of firms in a market B. selling a standardized product C. no barriers to entry D. All of these