A monetary growth rule means that
A) the Fed will raise interest rates if it thinks the economy is growing faster than potential.
B) the money supply should grow at a constant rate.
C) the Fed will lower interest rates if it thinks a recession is on the horizon.
D) the money supply should grow in response to economic conditions.
B
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Assume that in a private closed economy consumption is $240 billion and investment is $50 billion, both at the $280 billion level of domestic output. Thus:
A. saving is $10 billion. B. unplanned decreases in inventories of $10 billion will occur. C. the MPC is .80. D. unplanned increases in inventories of $10 billion will occur.
In the long run, an oligopolist is most likely to
A. Experience zero economic profits because barriers to entry do not exist in the long run. B. Face a straight demand curve. C. Produce at the most technically efficient output level due to long-run competition. D. Experience economic profits when sufficient barriers to entry are present.