The one main difficulty with a nominal GDP target rule for monetary policy is that it
A) is a difficult target to hit.
B) provides no nominal anchor.
C) requires a painful extinguishing response to an adverse supply shock.
D) performs badly when there is unstable velocity.
A
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The main avenue by which a temporary change in government purchases in the classical model affects the labor supply is by
A) changing the population. B) affecting the value of the stock market. C) increasing business confidence. D) affecting workers' wealth.
If additional units of output could be produced at constant opportunity cost, the production possibilities curve would be: a. bowed inward toward the origin
b. bowed outward away from the origin. c. positively sloped. d. a straight line with a negative slope.
The production possibilities curve illustrates the basic principle that
a. an economy's capacity to produce increases in proportion to its population. b. if all resources of an economy are in use, more of one good can be produced only if less of another is produced. c. an economy will automatically seek that output at which all of its resources are employed. d. no opportunity cost exists in production.
At the equilibrium price:
A. quantity supplied may exceed quantity demanded or vice versa. B. there are no pressures on price to either rise or fall. C. there are forces that cause price to rise. D. there are forces that cause price to fall.