Based on the given figure, the economy is initially at point A on the monetary policy reaction function (RF1) and the aggregate demand curve (AD1). The actual rate of inflation is ?' and the Federal Reserve's target inflation rate is ?*1.
If the Federal Reserve lowers its target inflation rate to ?*2, then the Federal Reserve's monetary policy reaction function will ________ and the aggregate demand curve will ________.
A. shift to RF3; shift to AD3
B. shift to RF3; shift to AD2
C. shift to RF2; shift to AD3
D. shift to RF2; shift to AD2
Answer: C
Economics
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A) the consumption function. B) saving. C) dissaving. D) investment.
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In the above figure, if the price is P1 and the firm produces Q2, it is
A) making an economic profit. B) incurring an economic loss. C) breaking even. D) More information is needed to determine if the firm is earning a positive economic profit, zero economic profit, or is incurring an economic loss.
Economics