Provide an example where monetary policymakers in the United States would be put in a position of conflicting goals and as a result forced to make a tradeoff.
What will be an ideal response?
We can borrow one from the text. By mid-2004 the economy had recovered completely from the recession of 2001. Businesses were increasing production and hiring new workers. But as the economy boomed the inflation rate started to rise. The FOMC accordingly began to raise the target interest rate. It turned out that the FOMC would ultimately make seventeen increases and inflation remained low. The goal of keeping inflation low and stable can be inconsistent with the goal of avoiding a recession because monetary tightening means higher interest rates, which reduce the availability of money and credit at the risk of slowing growth.
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In the labor market, as wages rise, households
A) decrease the quantity of labor supplied. B) increase the quantity of labor supplied. C) decrease the quantity of labor demanded. D) increase the quantity of labor demanded. E) increase the supply of labor.
The equilibrium outcome used in both the sequential and simultaneous move games is known as
a. The centrality equilibrium b. First mover equilibrium c. Nash equilibrium d. All of the above
By forming a cartel the member firms can actually raise their profits
a. True b. False Indicate whether the statement is true or false
One measure of “ability to pay” the national debt is the debt to
A. GDP ratio. B. tax ratio. C. spending ratio. D. investment ratio.