Economists who are concerned with the effect of fiscal policy on the ability of households and firms to borrow to finance consumption will focus on ________, and economists who want to know whether the government's fiscal policy is sustainable will
focus on ________. A) yearly budget deficits; the federal debt
B) the federal debt; yearly budget deficits
C) yearly budget deficits; both the federal debt and yearly budget deficits
D) the federal debt; both the federal debt and yearly budget deficits
C
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Write out the expression for the Taylor rule. Use the Taylor rule to explain how a decline in real GDP below potential GDP will affect the Federal Reserve's target for the federal funds rate
What will be an ideal response?
When plasma television sets were first introduced prices were high and few firms were in the market. Later, economic profits attracted new firms and the price of plasma televisions fell. This example illustrates
A) that consumers receive this new technology "free of charge" in the sense that they only have to pay a price for plasma televisions equal to the lowest production cost. B) a decreasing-cost industry. C) an industry with a low minimum efficient scale. D) how fickle consumer demands are.