The Slutsky equation shows that, holding the total effect constant, the income effect will be larger for goods that
A) have a smaller substitution effect.
B) make up a larger percentage of a household's budget.
C) have perfectly inelastic demand curves.
D) All of the above.
B
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According to the Taylor rule, the Fed should set the target for the federal funds rate equal to the sum of the equilibrium real federal funds rate, the current inflation rate, one-half times the ________, and one-half times the ________
A) interest rate gap; inflation gap B) interest rate gap; output gap C) inflation gap; output gap D) unemployment gap; government-spending gap
If the required reserve ratio is 15 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the M1 money multiplier is
A) 2.5. B) 1.67. C) 2.3. D) 0.651.
Games:
A. may have noncooperative equilibriums that are positive-positive outcomes. B. must have a dominant strategy present in order to reach an equilibrium. C. only have one possible stable outcome. D. None of these statements is true.
If aggregate demand decreases and expectations regarding inflation remain constant
A. the long-run Phillips curve shifts to the right. B. the economy moves along the short-run Phillips curve. C. the short-run Phillips curve shifts to the right. D. the short-run Phillips curve shifts to the left.