Assume that you purchased a $1,000 perpetual bond and the interest rate on that bond declined from 5 percent to 2 percent. Thus, a. the bond price increased by $1,500. b. you could sell this bond at a capital gain. c. if this was anticipated, the speculative demand for money fell. d. All of the […]
Date: September 10th, 2020
Assuming the central bank follows a money supply target, then an increase in the demand for money a. will shift the position of the LM schedule away from the predicted level even if the target level of the money supply is achieved. b. will shift the position of the LM schedule toward the predicted level […]
Date: September 10th, 2020
The per-worker production function flattens out due to ________. A) the negative relationship between price and quantity demanded B) the positive relationship between price and quantity demanded C) the diminishing marginal product of capital D) an increase in the general level of prices ANSWER C
Date: September 10th, 2020
Total factor productivity encompasses A) labor. B) capital. C) output. D) know-how. ANSWER D
Date: September 10th, 2020
If the firm hires more labor, everything else held constant, then A) the marginal product of labor falls. B) output decreases. C) there is an increase in the marginal product of labor. D) total factor productivity falls. ANSWER A
Date: September 10th, 2020
According the principle of time inconsistency, the most important element of policy making is a. predictability. b. transparency. c. credibility. d. judgment ANSWER C
Date: September 10th, 2020
Potential output a. is defined as the level of real output that the economy could produce at high rates of resource utilization. b. only occurs when both the unemployment rate and inflation rate are zero. c. can be estimated by choosing benchmark measures of high resource utilization. d. Both a and c ANSWER D
Date: September 10th, 2020
Which of the following statements is (are) correct? Regardless of whether the LM curve is vertical or upward sloping, a. a money stock target is superior to an interest rate target when the uncertainty facing the policymaker concerns the IS schedule. b. an interest rate target is always superior to a money stock target when […]
Date: September 10th, 2020
In the postwar era, the federal budget has typically been ________. A) balanced B) in surplus C) in deficit D) the largest component of Gross Domestic Product ANSWER C
Date: September 10th, 2020
In a move to increase its openness, the Fed has consistently increased the amount of information available to the public. According to the new classical model, the Phillips curve the Fed faces should become more: a. horizontal. b. very steep. c. vertical. d. unstable. ANSWER C
Date: September 10th, 2020
