True or false? The Edgeworth box version of inter-personal trade requires the individuals to be in close proximity of one another
A) True, that way they can see each other's endowments and prices.
B) False, begin in close proximity is not required for mutually beneficial trade to occur in the Edgeworth box.
C) True, the Edgeworth box only works when there folks see "eye-to-eye."
D) False, although prices are only valid if they are communicated in person.
B
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Suppose the equilibrium real federal funds rate is 3 percent, the target rate of inflation is 3 percent, the current inflation rate is 1 percent, and real GDP is 8 percent below potential real GDP
If the weights for the inflation gap and the output gap are both 1/2, then according to the Taylor rule the federal funds target rate equals A) -3 percent. B) -1 percent. C) 3.5 percent. D) 7 percent.
An increase in the price of a close substitute for good A will:
a. increase demand, increase price and increase the quantity exchanged. b. increase demand, increase price and decrease the quantity exchanged. c. increase supply, increase price and increase the quantity exchanged. d. decrease demand, decrease price and decrease the quantity exchanged.
Assume a simplified banking system subject to a 20 percent required reserve ratio. If there is an initial increase in excess reserves of $100,000, the money supply:
a. decreases $500,000. b. increases $500,000. c. increases $600,000. d. increases $100,000.
The tendency of suppliers to offer more of a good at a higher price:
a. subsidy b. supply schedule c. law of supply d. elasticity of supply e. excise tax