The theory of purchasing power parity implies the real exchange rate between two countries is:
A. flexible.
B. greater than one.
C. equal to one.
D. less than one.
Answer: C
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One key implication of rational expectations is that
A) anticipated monetary policy has no effect on the rate of unemployment or the level of real GDP. B) unanticipated monetary policy has no effect on the economy but anticipated monetary policy does have an effect on the economy. C) anticipated monetary policy can affect the rate of unemployment but not the level of real GDP. D) both unanticipated monetary policy and anticipated monetary policy have an effect on the economy.
________ is the value of a good minus the price paid for it summed over the quantity bought
A) Producer surplus B) Consumer surplus C) Surplus D) Shortage
Many states have no state-level personal income tax. How do you think that effects expenditure decisions?
What will be an ideal response?
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)Every one percent increase in the rate of inflation will:
A. increase the real federal funds rate by 1.5%. B. increase the real federal funds rate by 0.5%. C. increase the target federal funds rate by 1.5%. D. increase the target federal funds rate by 1.5% and increase the real federal funds rate by 0.5%.