The primary reason why the Fed cannot systematically surprise the public with its monetary policy is
A) the nonneutrality of money.
B) the presence of productivity shocks that generate real business cycles independent of the monetary side of the economy.
C) the presence of rational expectations among the public.
D) the presence of propagation mechanisms within the economy.
C
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If a firm functions in an oligopoly, it is:
A. one of a large number of firms that produce a good with no close substitute. B. the only firm that produces a good with no close substitutes. C. one of a large number of firms that produce goods that are either close or perfect substitutes. D. one of a small number of firms that produce goods that are either close or perfect substitutes.
The reform movements that began in many Latin American economies in the late 1980s favored
A) competitive devaluations. B) stronger military budgets. C) imports substitution policies. D) a stronger role for markets and more openness. E) more government regulation of industry.
In the Keynesian aggregate consumption-income graph, the vertical distance between the consumption function and the 45-degree line shows the:
a. amount of savings (or dissavings) at that level of disposable income. b. amount of disposable income at that level of consumption. c. increase in planned business investment at each level of inflation. d. increase in income that causes each change in real GDP.
Assume that the MPC is 0.80 and investment rises by $50 million. How much additional saving will this generate in the second round of spending?
a. $10 million b. $40 million c. $50 million d. $62.5 million e. $250 million