A shift to a more expansionary monetary policy will
a. help bring inflation under control.
b. exert a stabilizing impact on the economy if the effects of the policy are felt during an economic downturn.
c. exert a stabilizing impact if the effects of the policy are felt when the economy is operating at its full-employment capacity.
d. reduce the natural rate of unemployment.
B
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Refer to Figure 11.5. An increase in the marginal propensity to import is best illustrated by diagram
A) A. B) B. C) C. D) D.
If the price of inputs rises and foreign income rises:
a. Aggregate demand rises, and aggregate supply falls. b. Aggregate demand rises, but aggregate supply does not change. c. Aggregate demand falls, and aggregate supply rises. d. Aggregate demand and aggregate supply rise. e. Aggregate demand and aggregate supply fall.
Given the following formula for the Taylor rule:Target federal funds rate = natural rate of interest + current inflation + 1/2(inflation gap) +1/2(output gap) if the current rate of inflation is 5%, the natural rate of interest is 2%, and the target rate of inflation is 2%, and output is 3% above its potential, the target federal funds rate would be:
A. 6.5%. B. 10%. C. 2.5%. D. 3.5%.
Bureaucratic overprovision of a public good could occur because
A) of a failure of minimum differentiation. B) of rational ignorance among voters. C) voters want more of the good than do bureaucrats. D) bureaucrats attempt to maximize efficiency.