In the graph below, what is the price elasticity of supply (using the midpoint formula) between points A and B above?
A. 1
B. 3
C. 2
D. 1/3
A. 1
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The biggest problem caused by a deflation is that
A) prices fall. B) wages fall. C) interest rates rise. D) people cannot repay their debts.
According to the Taylor rule, the Fed should set the target for the federal funds rate equal to the sum of the equilibrium real federal funds rate, the current inflation rate, one-half times the ________, and one-half times the ________
A) interest rate gap; inflation gap B) inflation gap; output gap C) interest rate gap; output gap D) unemployment gap; government-spending gap
The difference between a fixed tax and a variable tax is that
a. fixed taxes can never be changed, but variable taxes can be changed. b. a change in fixed taxes has no effect on aggregate demand, but a change in variable taxes has an impact. c. a variable tax changes when GDP changes, but a fixed tax does not change with GDP. d. a variable tax can be changed easily, whereas changing fixed taxes requires a constitutional amendment.
How much is the interest rate on a bond that has a face value of $1,000, a selling price of $800, and pays $80 interest?
What will be an ideal response?