Suppose capital and labor must be used in fixed proportions to produce widgets and that the price elasticity of demand for widgets is zero. Then the wage elasticity of demand for labor by widget makers will be

If a perfectly competitive firm achieves productive efficiency then

A) it is producing at minimum efficient scale. B) it will raise its price in order to earn an economic profit. C) it is producing the good it sells at the lowest possible cost. D) the price of the good it sells is equal to the benefit consumers receive from consuming the last unit of the good sold.

According to the Taylor rule, if inflation in the last year was 6% and output was 2% below its full-employment level, the nominal Fed funds rate should be

A) 3%. B) 5%. C) 7%. D) 9%.