How does the Fed decide which monetary measure should be the focus of its monetary policy choices?
A) The Fed would like to track a monetary measure that is most closely related to the market interest rate.
B) The Fed would like to track a monetary measure that is most closely related to the quantity of money demanded by economic agents.
C) The Fed would like to track a monetary measure that is most closely related to the level of real GDP and the price level.
D) The Fed would like to track a monetary measure that is most closely related to government spending.
Ans: C) The Fed would like to track a monetary measure that is most closely related to the level of real GDP and the price level.
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In spring 2008, the U.S. Congress proposed to tax oil companies because of their near-monopoly status. This could have the unintended consequence of
A) increasing the equilibrium price by more than the tax. B) destroying the oil companies and leaving the United States without oil. C) increasing the profit of the best oil company. D) decreasing the power of the U.S. Congress.
Employers can find themselves in an adverse selection problem if there are too:
A. many applicants for each job. B. few applicants for each job. C. many qualified applicants for each job. D. many underqualified applicants for each job.