Monetary policy can have substantial effects on the economy even when nominal interest rates are very low
A) since real rates are what affects borrowing and spending decisions.
B) by improving borrower and bank balance sheets.
C) by reducing transactions costs.
D) only when the policy is substantial.
B
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Suppose that real GDP is initially $14 trillion and the government attempts to increase real GDP to $15 trillion
The marginal propensity to consume is 0.8, and every $1.00 increase in real government spending crowds out $0.50 in real planned investment expenditures. Which increase in government spending below could yield the desired level of real GDP? A) $100 billion B) $125 billion C) $200 billion D) $400 billion
Which of the following is a question that an economist would use to break down a problem?
A. Does the decision maker have a track record of being rational? B. Will the average income per person for the society increase? C. Is there a scarce resource that will be allocated? D. How might one person feel about the solution to the problem?
In many cities, the price of summer pops concerts has risen. In Charlotte, North Carolina, and Columbus, Ohio, for example, concerts that were once free now cost $5 . If there are only fixed costs and no variable costs nor marginal costs in an orchestra concert, what is the efficient price? Explain the reason why some people will find the efficient price unfair
A small economy produces only pizzas and jeans. If an economy is operating inside its production possibility frontier, which of the following statements is true?
A. it will be possible to produce more pizzas without decreasing the production of jeans. B. the economy will be operating at a point on its production possibilities curve. C. the economy will be operating at a point outside its production possibilities curve. D. it will not be possible to produce more jeans or pizzas.