Answer the following statement(s) true (T) or false (F)
1.Monetary policy is often more effective in an recessionary gap than in an expansionary gap.
2.A major criticism of quantitative easing is that it could eventually lead to inflation.
3.The Fed has significant control over nonbank institutions that issue credit.
4.A major problem with implementing fiscal policy and monetary policy is that the increase in aggregate demand might happen at the wrong time.
5.In order to know how much to stimulate the economy, policy makers must know the size of the divider.
1.false
2.true
3.false
4.true
5.false
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Used cars sell for much less than new cars because
A) of imperfect competition in the automobile industry. B) buyers know much more about the quality of used cars than sellers do. C) sellers know much more about the quality of used cars than buyers do. D) physical depreciation of used cars is very high. E) of licensing arrangements by the government.
The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $5 for 10,000 widgets. At that level of output, the firm's average total costs equal
a. $10 b. $15 c. $100 d. $150
Economists use abstract models because:
A. every economic situation is essentially the same, so specific details are unnecessary. B. every economic situation is unique, so it is impossible to make generalizations. C. they are useful for describing general patterns of behavior. D. computers have allowed economists to develop abstract models.
Figure 17-2
Given the situation in graph (1) in Figure 17-2, what movement would be expected in graph (2) from the economy's self-correcting mechanism?
a.
A to B
b.
A to D
c.
C to E
d.
D to C