Assume that the price level is flexible both upward and downward and that the Fed's policy is to keep the price level from either rising or falling. If aggregate supply increases in the economy, the Fed:
A. will have to increase interest rates to keep the price level from falling.
B. will have to reduce the money supply to keep the price level from rising.
C. will have to increase the money supply to keep the price level from falling.
D. can keep the price level stable without altering the money supply or interest rate.
C. will have to increase the money supply to keep the price level from falling.
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In the single-polluter case, suppose a firm faces an emission charge implemented as a marginal tax (MT) of 12 and that its MAC = 0.8A. Based on this information, the firm
a. is better off paying the tax at abatement levels below 15 units b. should abate pollution for all abatement levels up to 15 units c. is better off paying the tax as long as the abatement level is 1.5 units or less d. none of the above
One method of calculating Gross Domestic Product (GDP) is to add together
A. consumption, investment, government spending, and net exports. B. consumption, wages, interest, rental income, and exports. C. investment, consumption, gross profits, and net exports. D. wages, gross profits, net investment, and net exports.