One of the main reasons some central banks set target inflation rates is to ______.
a. increase productivity
b. simplify fiscal policy
c. foster greater price stability
d. boost investment from abroad
c. foster greater price stability
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Discuss the short-run and long-run views of PPP. Make sure that you explain the underlying adjustment mechanism and theoretical reasoning for each view when answering the question
Which view, do you think, is more likely to represent the real world?
An increase in demand and a decrease in supply will lead to an
A) unambiguous increases in both price and quantity. B) unambiguous decreases in both price and quantity. C) an unambiguous increase in quantity, but the effect on price is indeterminate. D) an unambiguous increase in price, but the effect on quantity is indeterminate.
Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect
a. new firms to enter the market. b. the market price to fall. c. its profits to fall. d. All of the above are correct.
A monopolist can maximize profits by:
A. following the same rules as a perfectly competitive firm. B. producing at the level of output at which MR = 0. C. selling an output where P = ATC. D. selling as much as he can produce.