If the consumer price index increased from 1.52 to 1.65, then it must be the case that ________ relative to prices in the base year.
A. some prices rose and some prices fell
B. all prices rose
C. the weighted average level of prices rose
D. all prices fell
Answer: C
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Suppose the foreign exchange market is in equilibrium. Then, the U.S. government increases borrowing, causing American interest rates to increase. What will happen to the price of the Japanese yen? Why?
What will be an ideal response?
Which of the following would shift a nation's production possibilities frontier inward?
A) discovering a cheap way to convert sunshine into electricity B) producing more capital equipment C) an increase in the unemployment rate D) a law requiring workers to retire at age 50
Rational expectations theory would imply that the graphical relationship between unemployment and inflation indicated by the Phillips curve is ____ in the short-run
a. vertical b. positively sloped c. negatively sloped d. horizontal
Suppose the economy operates at potential output, if the amount that businesses plan to invest is greater than the amount that consumers plan to save, then
A. there will be an inflationary gap. B. there will be a recessionary gap. C. equilibrium GDP will be less than aggregate investment. D. the economy will experience inventory accumulation.