You are the chairperson of the Board of Governors of the Federal Reserve. You believe in a Keynesian model of the economy, and your goal is to keep the economy at the full-employment level of output
How would you respond (tightening or easing policy) in each of the following cases? (a) Government purchases increase (b) Corporate tax rates increase (c) Expected inflation increases (d) There's a beneficial oil price shock (and the LM curve shifts more to the right than the FE line)
(a) Tighten
(b) Ease
(c) Tighten
(d) Tighten
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The board of education of a school district faced with a surplus of teachers, but unable to lower salaries because of union contracts, will
A) be unable to balance the quantity supplied with the quantity demanded. B) have to hire fewer teachers than it wants to. C) have to hire more teachers than it wants to. D) tend to have relatively few young teachers on its payroll.
Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick, and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollars
A) Tom will receive $12 of consumer surplus from buying one shirt. B) Harriet will receive $25 of consumer surplus since she will buy no shirts. C) Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. D) Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts.