Inflation targeting is a policy in which the Fed
A. uses open market operations as a method of discretionary intervention.
B. tries to reduce inflation by setting a high federal funds rate target.
C. tries to reduce inflation by setting a low federal funds rate target.
D. announces an inflation target and then runs monetary policy to hit that target.
Answer: D
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When the price of a Caesar salad is $5.00, the demand for Caesar salads is elastic, and when the price is $4.00, the demand is inelastic. If Mike's Roadside Restaurant cuts the price from $5.00 to $4.00, its total revenue from Caesar salads ________
A) will increase B) will decrease C) will remain the same D) might increase, decrease, or remain the same
If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A) government purchases. B) the money supply and a decrease in interest rates. C) taxes. D) oil prices.
A long term goal of the EU member countries is to integrate their economies into a single economic entity with a common currency as well as common trade policies and internal factor mobility
Indicate whether the statement is true or false
If at its current production level, a perfectly competitive firm's marginal revenue and long-run marginal cost are equal to $1.50 and its long-run average cost is $1.50, which of the following statements is true?
A) The firm should expect the market price of its product to fall. B) The firm should expect to earn positive economic profit indefinitely. C) The firm should expect the market price of its product to increase. D) The firm is earning zero economic profit.