In order for a price floor to be effective, it must be set _____________ the equilibrium price, while a price ceiling must be set _____________ the equilibrium price in order to be effective.
a. above; below
b. above; above
c. below; above
d. below; below
e. at; at
a. above; below
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Refer to Figure 16-8. In the graph above, suppose the economy in Year 1 is at point A and is expected in Year 2 to be at point B. Which of the following policies could Congress and the president use to move the economy to point C?
A) decrease government purchases B) increase income taxes C) sell Treasury bills D) increase government purchases
Carefully explain the difference between forecasting variables separately versus forecasting a vector of time series variables. Mention how you choose optimal lag lengths in each case
Part of your essay should deal with multiperiod forecasts and different methods that can be used in that situation. Finally address the difference between VARS and VECM. What will be an ideal response?
If input prices for perfectly competitive firms increase as the output of its industry expands: a. their short run average cost curves will shift up as the industry expands
b. after a permanent increase in demand, the long run equilibrium price will be higher than the original price. c. after a permanent increase in demand, the short run equilibrium price will be higher than the eventual long run equilibrium price. d. all of the above will be true.
Which of the following is not an assumption of perfectly competitive markets?
A) There are many sellers and many buyers, all of which are small relative to the market. B) Each firm produces a similar but not identical product. C) There are no barriers to new firms entering the market. D) The products sold by all firms in the market are identical.