Which of the following is true about a liquidity trap situation:
a. Quantitative easing might be a more effective strategy to stimulate the economy than buying short term government securities.
b. Quantitative easing may be able to affect long term interest rates even when the Fed is unable to appreciably lower short term interest rates.
c. The Fed cannot easily reduce the fed funds interest rate.
d. All of the above are true.
d
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The short-run version of aggregate supply assumes that product prices are ________.
A. both input and product prices are fixed B. fixed while resource prices are flexible C. flexible while resource prices are fixed D. both input and product prices are flexible
Johnny owns a house that would cost $100,000 to replace should it ever be destroyed by fire. There is a 0.1% chance that the house could be destroyed during the course of a year. Johnny's utility function is U = W0.5
How much would fair insurance cost that completely replaces the house if destroyed by fire? Assuming that Johnny has no other wealth, how much would Johnny be willing to pay for such an insurance policy? Why the difference?
Before the period of modern economic growth:
A. only civilizations such as the Roman Empire experienced economic growth. B. rates of population growth virtually matched rates of output growth. C. most economies realized high rates of growth in output per person. D. output and population growth were stagnant.
If the price is $5 and the quantity demanded is 100 units, then at a price of $10, the quantity demanded will be
A) less than or equal to 100 units. B) greater than or equal to 100 units. C) less than or equal to 1000 units. D) equal to 100 units.