Which of the following summarizes the limitations of monetary policy?
A. The Fed is most effective at influencing long-term interest rates but is unable to have a short-run impact on the economy.
B. The Fed directly sets all interest rates, but no interest rate has any short-run effect on the economy.
C. The Fed can directly influence many different interest rates, but it can only influence them a little bit.
D. The Fed has a lot of control over just one interest rate, and interest rates influence economic activity in the short run only.
Ans: D. The Fed has a lot of control over just one interest rate, and interest rates influence economic activity in the short run only.
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The principle of revealed preference would say that if Xavier chooses market basket A over market basket B then:
A) if A is more expensive than B, then Xavier must prefer A over B. B) if A is more expensive than B, then Xavier must prefer B over A. C) if A is less expensive than B, then Xavier must prefer A over B. D) if A is less expensive than B, then Xavier must prefer B over A.
The level of an economic activity should be increased to the point where the ____
a. Marginal cost=0 b. Marginal revenue=0 c. Total revenue = Total cost d. Marginal revenue – marginal cost=0