Allocative efficiency is achieved when firms produce goods and services
A) that consumers value most. B) at a marginal cost of zero.
C) at the lowest possible cost. D) at the lowest opportunity cost.
A
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Starting from full employment at the initial target inflation rate, if there is an adverse inflation shock, then the Federal Reserve must _____ in order to keep inflation from becoming permanently higher.
A. increase the target inflation rate. B. decrease the target inflation rate. C. maintain the initial target inflation rate. D. shift the short-run aggregate supply curve up.
Along any IS curve
a. both government spending and expectations are fixed. b. government spending and the price level may vary. c. consumption and the price level are fixed. d. both government spending and tax rates may vary. e. all of the above