Starting from full employment at the initial target inflation rate, if there is an adverse inflation shock, then the Federal Reserve must _____ in order to keep inflation from becoming permanently higher.
A. increase the target inflation rate.
B. decrease the target inflation rate.
C. maintain the initial target inflation rate.
D. shift the short-run aggregate supply curve up.
Answer: C. maintain the initial target inflation rate.
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Refer to Figure 24-2. Ceteris paribus, an increase in the labor force would be represented by a movement from
A) SRAS1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A.
Which of the following does not describe a pure market economy? a. The choices of buyers and sellers determine the market prices of goods and services. b. Prices serve as signals to buyers and sellers
c. Prices and outputs of most goods and services are stable over time. d. Owners of resources in greater demand by others tend to have higher incomes.
Which statement is true?
A. Most monopolistic competitors are large firms. B. Monopolistic competitors produce goods or services for which there are no close substitutes. C. Monopolistic competitors usually operate at the minimum point of their average total cost curves. D. None of these statements are true.
The dispute over the pay of chief executive officers (CEOs) of U.S. corporations hinges on whether or not such pay:
A. should be granted for past performance or for current performance. B. is determined in a competitive labor market or in a monopsonistic labor market. C. is justified on productivity grounds or mainly reflects an overestimation of CEO importance by corporate boards of directors. D. should contain performance incentives such as stock options, stock shares, or bonuses.