If output falls, which of the following could be an explanation?
a. a rise in the interest rate
b. a fall in foreign income
c. a decline in government spending
d. a rise in the interest rate, a fall in foreign income, or a decline in government spending
Ans: d. a rise in the interest rate, a fall in foreign income, or a decline in government spending
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If the Fed follows the Taylor rule and the economy goes into a recession, the Fed would
A) raise the federal funds rate B) reduce tax rates. C) increase government expenditures. D) lower the federal funds rate. E) None of the above answers is correct.
Rick and Kate want to go on a date. Rick wants to go to a rock concert while Kate wants to go to a movie. Rick values going to the concert at $100, while Kate values watching a movie at $50. What is the equilibrium in this situation?
What will be an ideal response?