Monetary policy administered by the Fed is the principal method of softening the effects of the business cycle because _____.
(A) The outside lag for fiscal policy is shorter than the outside lag for monetary policy.
(B) There are more political complications with determining and implementing fiscal policy.
(C) Fiscal policy is not effective at easing the fluctuations of the economy.
(D) Monetary policy has the shortest total delay in implementing and achieving a planned outcome.
Answer: (B) There are more political complications with determining and implementing fiscal policy.
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When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve, the price elasticity of demand is:
a. greater than 1. b. equal to 1. c. less than 2. d. equal to 0.
The marginal propensity to consume is always
a. a negative number b. larger than 1.0 c. larger than 10 d. greater than zero and less than 0.5 e. greater than zero and less than 1.0