Demand pull inflation occurs when the:
A. price of necessity goods increases suddenly.
B. business cycle becomes sporadic and unpredictable.
C. price level changes in response to changes in the business cycle.
D. price of a key input increases suddenly.
Answer: C
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In the real business cycle model, an increase in current total factor productivity leads to
A) an increase in investment. B) a decrease in investment. C) no change in investment. D) an ambiguous response of investment.
A price floor set above the equilibrium price is binding
a. True b. False Indicate whether the statement is true or false
The value of intermediate goods is excluded from the measurement of GDP in order to:
A. measure GDP in constant prices. B. avoid double counting. C. adjust for inflation. D. index economic activity.
Refer to Figure 8A.1. The stock of capital no longer increases once the economy reaches point
A) a. B) b. C) c. D) e.