Refer to Exhibit 7-5. During year 3, Country Z experienced economic _____________ and _________________.
A) decline; deflation (falling price level)
B) growth; inflation (rising price level)
C) growth; deflation (falling price level)
D) decline; inflation (rising price level)
Ans: D) decline; inflation (rising price level)
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Deflation refers to a:
a. decreasing relative prices. b. decreasing price level. c. slowing down of the rate of inflation. d. federal government policy of running budget surpluses.
If an economic model includes an assumption that there are only two nations in the world, this would be an example of
a. a critical assumption b. an implicit assumption c. a simplifying assumption d. a concrete assumption e. a detail assumption
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
According to the text, the federal government spends the most taxpayer-provided funds regulating which area of the economy?
A) the environment B) finance and banking C) consumer safety and health D) transportation