Which of the following accurately describes the Fed's inflation target?
A) It is implicit rather than explicit.
B) It seeks to maintain an average inflation rate of 2% per year.
C) It seeks to keep inflation at 2% all the time.
D) Its goal is to achieve zero inflation.
B
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A professor in your microeconomics lectures derived a labor demand curve in the lecture
Given some reasonable assumptions, she showed that the demand for labor depends negatively on the real wage. You want to put this hypothesis to the test ("show me") and collect data on employment and real wages for a certain industry. You try to estimate the labor demand curve but find no relationship between the two variables. Is economic theory wrong? Explain. What will be an ideal response?
In recent years, the increasing relative wage of skilled labor has been mostly due to
A) a decrease in the supply of skilled labor that exceeds the decrease in demand. B) an increase in the demand for skilled labor that exceeds the increase in supply. C) a decrease in the supply of, and increase in the demand for, skilled labor. D) government laws promoting the hiring of skilled labor. E) government subsidies provided to college students.