Changes in inventory investment are ________ for the Fed to use to time changes in monetary policy
A) too short-lived
B) short-lived enough
C) gradual enough
D) too gradual
A
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Refer to Figure 16.1. An increase in the real interest rate is best represented by a movement from
A) point A to point B. B) point B to point A. C) point A to point C. D) point C to point A.
For those who favor an active approach, public policy changes are necessary to cure a recessionary gap because: a. the short-run aggregate supply curve will otherwise shift quickly to the right
b. prices and wages are flexible downward but not upward. c. the required decrease in output can be achieved only by shifting the aggregate demand curve. d. real wages must fall in order to increase aggregate supply in the economy. e. falling money wages will cause the AD curve to shift leftward unless policy counters this movement.
If a firm goes out of business, what happens to the firm’s assets and workers?
A. The assets and workers become available for use by other firms in potentially more productive ways. B. The assets and talents of the employees are lost permanently. C. The assets and talents of the workers must remain with the firm owners D. The assets and workers become available for use by other firms, but only for less productive purposes.
The water and diamond paradox is explained by the fact that the total utility of water is higher than the total utility of diamonds, but the marginal utility of water is lower than the marginal utility of diamonds. Which of the following goods, when compared, have total and marginal utilities that best reflect the water and diamond paradox, although certainly not as vividly?
a. cake and ice cream b. wine and soft drinks c. jewelry and tattoos d. bread and caviar e. horses and automobiles