If higher inflation ensues from a temporary negative supply shock, and in response, the central bank raises interest rates, then ________
A) it is likely adopting a policy to stabilize inflation in the short run
B) short-run inflation will fluctuate around (first go higher then go lower than) the long run level of inflation
C) it will need to lower interest rates back to their original values to ensure that inflation returns to its original rate
D) all of the above
E) none of the above
D
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________ bubble is driven entirely by unrealistic optimistic expectations
A) An irrational exuberance B) A credit-driven C) A stock D) A debt-driven
A specific tax of $1 per unit of output will affect a firm's
A) average total cost, average variable cost, average fixed cost, and marginal cost. B) average total cost, average variable cost, and average fixed cost. C) average total cost, average variable cost, and marginal cost. D) marginal cost only.