Suppose a decrease in price increases quantity demanded from 8 to 12. Using the mid-point formula, the percentage change in quantity demanded is:

The notion that the central bank should set its federal funds target by a formula that puts weight on both output and inflation gaps is known as ________

A) the Taylor rule B) the constant growth rate rule for money C) the equation of exchange D) the Lucas rule

If the government wishes to correct the existence of positive externality, it could

A) grant subsidies to consumers to stimulate demand. B) impose a tax on the producers to stimulate supply. C) impose taxes on consumers to stimulate demand. D) grant subsidies to producers to reduce supply.