Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her total costs of the new business include:
A. both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year.
B. only her forgone salary of $42,000 per year.
C. only the expenses incurred for office space, equipment, and supplies.
D. neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year.
Answer: A
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Assume a central bank follows a rule that requires it to take steps to keep the price level constant. If the price level rose because of an increase in aggregate demand and a decrease in aggregate supply that kept output unchanged, then
a. the central bank would have to decrease the money supply which would decrease output. b. the central bank would have to decrease the money supply which would increase output. c. the central bank would have to increase the money supply which would decrease output. d. the central bank would have to increase the money supply which would increase output.
Monetary policy is thought to be:
A. equally effective in moving the economy out of a depression as in controlling demand-pull inflation. B. more effective in moving the economy out of a depression than in controlling demand-pull inflation. C. more effective in controlling demand-pull inflation than in moving the economy out of a recession. D. only effective in moving the economy out of a depression.