What was the main reason the Fed stopped announcing growth targets for money aggregates in the early 2000s?
What will be an ideal response?
The main reason is that the link between the monetary base and the supply of M2 and M3 seemed to breakdown in the sense that it was constant or predictable. This meant that the money multiplier is unstable or unpredictable. Control of the monetary base does not give central bankers control over the money aggregates over a two- or three-year period which is usually the horizon used for short-term policy making.
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A profit-maximizing firm in monopolistic competition should shut down in the short run
a. if marginal revenue is less than price b. if price is always less than average total cost c. if price is always less than average fixed cost d. if price is always less than average variable cost e. under no circumstances
The origin of the Phillips curve is the idea that an increase in
a. AD will lead to more inflation and more unemployment. b. AD will lead to more inflation and lower unemployment. c. AS will lead to lower inflation and lower unemployment. d. AS will lead to less inflation and higher unemployment.