Which of the following statements is always true when inflation occurs?
a. Lenders benefit and borrowers suffer.
b. Borrowers benefit and lenders suffer.
c. The international competitive position of the country is negatively affected.
d. The domestic money loses purchasing power.
e. None of the above is true.
.D
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
The Compensating Variation for an increase in the price of a good is
A) the minimum amount of money a consumer would accept to voluntarily accept the price increase. B) the maximum amount of money a consumer would pay to avoid the price increase. C) the change in consumer surplus resulting from a price increase. D) the change in utility resulting from the increase in price.
The profit of a firm is maximized when:
a. marginal revenue is maximum. b. marginal revenue is greater than marginal cost. c. marginal revenue is equal to marginal cost. d. marginal cost is minimum. e. marginal revenue is less than marginal cost.
Select the graph above that best shows the change in the market specified in the following situation: In the market for leather coats, when leather coats become more fashionable among young consumers.
a. Graph A b. Graph B c. Graph C d. Graph D