Which of the following is an important advantage of discretionary monetary policy?
a. Influencing the political business cycle
b. Flexibility to deal with changing economic conditions
c. Limiting the opportunities for abuse of power by policymakers
d. Avoiding the time inconsistency of policy problem
b
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Allocative efficiency occurs
A) anywhere inside or on the production possibilities frontier. B) when the total cost of production is minimized. C) at all points on the production possibilities frontier. D) at only one point on the production possibilities frontier. E) at the points where the production possibilities frontier crosses the horizontal or vertical axis.
The income elasticity of demand for food
A) does not change when an individual's income changes. B) increases as an individual's income increases. C) decreases as an individual's income increases. D) is negative.
An increase in the price level shifts the AE curve
A) upward and shifts the AD curve leftward. B) upward and shifts the AD curve rightward. C) downward and shifts the AD curve rightward. D) downward and does not shift the AD curve. E) downward and shifts the AD curve leftward.
A purchase of foreign assets by a central bank has the same impact on the monetary base as:
A) an open market purchase of government securities B) an open market sale of government securities C) an increase in the discount rate D) a reduction in the interest on reserves