An argument against inflation targeting is that
a. the Fed does not completely control inflation.
b. it rules out stabilization policy.
c. puts too much emphasis on low inflation.
d. All of the above
D
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The yield curve is the relationship between the:
a. Real yield (i.e., interest rate) and actual inflation. b. Real interest rate and expected inflation rate. c. Domestic yield and foreign yield. d. Nominal yield on corporate securities and the yield of government securities. e. Nominal yield and time to maturity of a security.
When studying how some event or policy affects a market, elasticity provides information on the
a. change in the costs of production. b. tradeoff between equality and efficiency. c. effect on the budget deficit or surplus. d. direction and magnitude of the effect.
Suppose the price for one gallon of gasoline rises from $3.50 to $4.00 and the price of one gallon of milk rises from $3.00 to $3.20 . If the CPI rises from 120 to 132, then people likely will buy
a. more gasoline and more milk. b. more gasoline and fewer milk. c. less gasoline and more milk. d. less gasoline and fewer milk.
If Nathan is willing to pay up to $3 for an ice cream but he actually pays $2 for it. The consumer surplus of the ice cream for Nathan
A. is $2. B. is $3. C. is $1. D. cannot be determined without information about the market structure.