How useful is M2 in tracking inflation? Explain.
What will be an ideal response?
Empirical research mentioned in the chapter shows that across many countries, high rates of growth in M2 were associated with high rates of inflation and relatively low growth rates in M2 in many countries also were associated with low rates of inflation. For this reason many economists believe that, at least for moderate inflation rates, controlling inflation means controlling the money growth.
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Compared to the U.S. production function, the European production function is
A) lower. B) the same. C) higher. D) lower than the U.S. production function at low levels of employment and higher than the U.S. production function at high levels of employment. E) higher than the U.S. production function at low levels of employment and lower than the U.S. production function at high levels of employment.
The above figure shows the production possibility frontier for a country. Suppose the country is producing at point A. What would be the opportunity cost to increase the production of rice to 12 tons?
A) 6 thousand bottles of wine B) 15 thousand bottles of wine C) 9 thousand bottles of wine D) 6 tons of rice E) Nothing, it is a free lunch.