By announcing a higher inflation target, a central bank can
A) permanently increase real GDP and permanently decrease the unemployment rate.
B) temporarily increase real GDP and permanently decrease the unemployment rate.
C) permanently increase real GDP and temporarily decrease the unemployment rate.
D) temporarily increase real GDP and temporarily decrease the unemployment rate.
D
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A network externality refers to a situation where:
A) the value of a product increases as more consumers start to use it. B) firms collude to sell products at a price higher than the equilibrium market price. C) a firm that has control over key resources auctions the resources off to other firms. D) the government interferes to prevent the concentration of market power in the hands of a few firms.
The 1981 tax reform act reduced taxes on high-income individuals. Many economists believed that high tax rates would deter high-income individuals from working and investing, thus slowing the growth of income. This illustrates the issue of
a. the equality-efficiency trade-off. b. usury. c. the effects of budget deficits on future generations. d. the cost disease of the public sector. e. the importance of externalities.