In the above figure, suppose the economy is currently in equilibrium at point C. Applying rational expectations theory, what happens if the Fed announces that it is decreasing the money supply and follows through on its statement?
A. Real Gross Domestic Product (GDP) per year will increase.
B. The price level will increase.
C. The price level will decrease.
D. Real Gross Domestic Product (GDP) per year will decrease.
Answer: C
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When a central bank makes joint decisions with the government's Treasury department,
A) the central bank is asserting its independence. B) the government loses its ability to conduct fiscal policy. C) the central bank risks losing credibility. D) the government enhances its credibility.
According to the Organization for Economic Cooperation and Development (OECD):
A. the United States has the most progressive tax system among OECD nations. B. the United States has the least progressive tax system among OECD nations. C. the U.S. tax system has the same degree of progressivity as those of nations such as Canada, Japan, and France. D. the U.S. tax system has the same degree of progressivity as those of many developing nations.
Refer to the data. How many units of the two products will the rational consumer purchase?
Answer the question on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $3 and $4 respectively and that the consumer's income is $18.
A. 3 of L and none of M
B. 4 of L and 2 of M
C. 3 of L and 5 of M
D. 2 of L and 3 of M
Economic Investment:
What will be an ideal response?