Incentives are
A) potential rewards available if a particular activity is undertaken.
B) ineffective as a device to get people to behave in a certain fashion.
C) inappropriate ways to obtain a certain kind of behavior.
D) useless when people behave rationally.
Answer: A
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The aggregate demand curve will shift to the left ________ the initial decrease in government purchases
A) by less than B) by more than C) by the same amount as D) sometimes by more than and other times by less than
If output falls 1.0 percentage point below its potential, the Taylor rule predicts that the Fed should:
A. reduce the federal funds rate by 0.5 percentage points. B. raise the federal funds rate by 1.0 percentage points. C. raise the federal funds rate by 1.5 percentage points. D. reduce the federal funds rate by 1.0 percentage points.