What is the relationship between fiscal multipliers and the "zero lower bound"?
A) Fiscal multipliers cannot fall below zero.
B) When monetary policy has hit the zero lower bound, fiscal multipliers are likely to be larger than normal.
C) At the zero lower bound, a fiscal contraction is actually expansionary.
D) At the zero lower bound, fiscal policy works by shifting the aggregate supply curve, rather than shifting the aggregate demand curve.
B
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When poverty is defined by an absolute real income level, what will happen to the poverty rate if income per capita in a country continues to grow?
A) The poverty rate will increase forever. B) The poverty rate will eventually be zero. C) The poverty rate will increase and then decrease. D) The poverty rate will never change.
Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What are Winston's implicit costs?
A. $64,000 B. $72,000 C. $4,000 D. $60,000
Which of the following can lead to permanent differentials in resource prices?
a. an increase in demand for a product produced by the resource b. differences in the inherent quality of resources c. differences in the time and money involved in developing necessary skills d. differences in the nonmonetary rewards of a job e. a lack of resource mobility
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%.