What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent per year?
A) The Fed could follow contractionary monetary policy that would reduce the federal funds rate to zero so investment will rise consistently.
B) The Fed could maintain a growth rate of the money supply of 4 percent, regardless of whether inflation was rising or falling in the economy.
C) The Fed has no direct control over real GDP in the long run, so there are no actions it could take to achieve that goal.
D) The Fed could increase the growth rate of the money supply by 1% each year until the inflation rate was exactly equal to 4 percent.
C
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A rational decision maker engages in an activity if that activity is more attractive than the best alternative
a. True b. False
Critics of a single tax on land oppose the idea because:
A. it would overtax the population. B. changes in land ownership would cause the tax burden to fall unfairly on people who did not receive economic rents. C. it would disproportionately tax the richest members of society. D. it would cause too much land to be brought out of production.