Aggregate supply shocks are:
A. the result of structural policy actions.
B. the result of monetary policy actions.
C. inflation shocks or shocks to potential output.
D. the result of fiscal policy actions.
Answer: C
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In the dominant firm model, the smaller fringe firms behave like:
A) competitive firms. B) Cournot firms. C) Stackelberg firms. D) Bertrand firms. E) monopolists.
Assume the current one-year interest rate on a bond is 4%, and the one-year expected rate a year from now is 8%. According to the expectations theory of the term structure of interest rates, the two-year interest rate is
A. 4%. B. 6%. C. 8%. D. 12%.
A downward shift of the planned expenditure curve resulting from an increase in the price level corresponds to
A) a movement up along the aggregate demand curve. B) a movement down along the aggregate demand curve. C) an increase in aggregate demand. D) a decrease in aggregate demand.
John is planning ahead for retirement in a two-period world. When John is young he will earn $1 million, and when John is old and retired he will be given $50,000 from Social Security. If the interest rate between the two time periods is 7 percent, what is the slope of John's budget constraint when considering the consumption possibilities between the two periods if consumption when young is
graphed on the horizontal axis and consumption when old is graphed on the vertical axis? a. -0.89 b. -1.05 c. -1.07 d. -1.12