What problems can high inflation rates cause for the economy?
What will be an ideal response?
The problems that inflation causes for the economy include the loss of purchasing power of money, menu costs, and an unintended redistribution of income.
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In the above figure, Brendan originally consumes at point A. If his income rises and both compact discs and haircuts are normal goods then he could begin consuming at point
A) B, C, or D. B) B. C) C. D) D.
Your roommate is having trouble grasping how monetary policy works. Which of the following explanations could you use to correctly describe the mechanism by which the Fed can affect the economy through monetary policy? Increasing the money supply
A) lowers the interest rate, raises the value of the dollar, lowers the prices of exports, and raises net exports. B) raises the interest rate and consumers decrease spending on durable goods. C) causes people to spend more because they know prices will rise in the future. D) lowers the interest rate, and firms increase investment spending.
In the 1870s,
a. cotton prices were declining. b. the Deep South became a food importing region. c. an increasing percentage of small farms specialized in cotton. d. black farmers devoted more of their land to cotton than white farmers. e. All of the above.
During World War II, a nation's opportunity cost of devoting resources to the war effort was ______________.
Fill in the blank(s) with the appropriate word(s).